Legal Guide for companies under the Free Trade Zone Regime in Costa Ric

The Free Zone Regime (FTZ) in Costa Rica is an attractive option for domestic and foreign companies seeking to establish and develop their operations in the country. This regime, governed by Law No. 7210 and its regulations, has as its main objective to encourage Foreign Direct Investment (FDI), promote trade and contribute to the generation of employment in the country.

Types of companies that can benefit from the free trade zone regime

Companies that can benefit from the free zone regime in Costa Rica include:

• Trading companies: Companies that handle, repackage or redistribute non-traditional products for export, without being able to sell in the local market.
• Services in strategic sector: Companies that provide services to individuals or companies domiciled in Costa Rica, abroad or to other Free Zone companies, provided they comply with the Strategic Eligibility Index for Service Companies (IEES).
• Park Administrators: Companies dedicated to the administration of parks for the installation of companies under the Free Zone Regime.
• Strategic sector manufacturers: Companies that transform raw materials into processed or semi-manufactured products, with specific requirements according to the level of export and supply to other Free Trade Zone companies.

In addition, it must be taken into account that there are some activities that are prohibited to be developed under the free zone regime in Costa Rica, among them:

• Mining extraction.
• Exploration or extraction of hydrocarbons.
• Production or commercialization of arms and ammunition containing depleted uranium.
• Companies engaged in the production or commercialization of any type of weapons.
• Companies engaged in the generation of electric power, unless the generation is for self-consumption.
• Banking, financial and insurance companies.
• Individuals or legal entities engaged in rendering professional services.

9 benefits and some obligations for companies in free trade zones

Why would it be convenient for you to work under this figure? Well, basically because companies established in the Free Trade Zone enjoy a series of benefits, which include:

1. Exemption in the importation of goods necessary for the operation and administration of the activity authorized to the company.
2. Exemption in the importation of certain vehicles.
3. Exemption of taxes on local purchases of goods or services necessary for the operation and administration of the activity authorized to the company.
4. Export exemption.
5. Exemption for a period of 10 years of real estate transfer taxes and municipal patent.
6. Exemption from remittance tax.
7. Exemption from all taxes on profits, as well as from any other tax whose taxable base is determined in relation to gross or net profits, dividends paid to shareholders or income or sales.
8. Tax credits exclusively for manufacturing companies, applicable to reinvestment of profits in fixed assets or in training expenses.
9. Access to training and education programs for workers and aspiring workers.

In addition to the benefits, companies wishing to apply to the Free Zone regime must comply with certain obligations, such as making a minimum initial investment backed by new fixed assets subject to depreciation and real estate, generating a minimum number of jobs, and complying with additional requirements depending on the sector.

Legal advice for companies interested in the Free Trade Zone Regime

Given the complexity of the requirements and obligations established in the Free Zone Law, as well as the variety of benefits that companies can obtain, it is highly advisable to have specialized legal advice on the subject to ensure proper compliance with all legal provisions and maximize the benefits that this regime offers.

If your company is interested in benefiting from the Free Zone Regime in Costa Rica or if it already operates under this model, at Acacia Legal we have the knowledge and experience in Commercial Law that will be fundamental to navigate both processes successfully. Contact us if you wish to quote our services or have any questions, we will be glad to advise you.