Costa Rican Free Trade Zones (FTZ), known in Spanish as “zonas francas,” offer member companies a wide range of financial incentives and benefits. FTZs are open to export manufacturing companies, export trade companies (not producers), export service companies, organizations engaged in scientific research, or manufacturing firms with no export requirements.
The Free Zone Regime Law, Number 7210, governs the operations of all companies that operate within the Free Trade Zone Regime (FTZR). FTZR incentives are subject to limitations regarding length and type of benefits.
To qualify for FTZ benefits, a company must be categorized into one of the groups established by free trade zone law, which extend to the handling, processing, manufacture, production, repair and maintenance of goods, as well as services for exportation or re-exportation. Within the Central Valley Greater Metropolitan Area, a minimum $150,000 initial investment is required; outside of this area, $100,000 is the minimum required investment. The minimum required investment must be disbursed within three years of a company’s approval for FTZ benefits.
Companies under the FTZR enjoy many benefits, most related to tax incentives. All FTZ companies enjoy 100% exemption for import and export duties, excise taxes, and remittances repatriation tax. Other financial incentives are granted according to a company’s individual circumstances. For example, manufacturing companies that export more than 75% of their production are granted 100% exemption on corporate income tax for a period of 8 years, and 50% exemption during the following 4 years.
Other incentives for free trade zone companies include employee training assistance in conjunction with the Instituto Nacional de Apredizaje (National Learning Institute, or INA). Assistance is also offered regarding employee hiring, determining employee housing and educational needs, and advice regarding ongoing legal requirements for FTZ companies.
Manufacturing Firms Under Law 7210
|Under Law 7120|
|Minimum export level||75%|
|Belong to a strategic sector||Not required|
|Minimum employment level||Not required|
|Minimum required investment||$150,000 in fixed assets within FZ Park or $2,000,000 outside FZ Park|
Manufacturing Firms Under Law 8794
|Main Requirements||Small/Mid-scale Projects||Large-scale Projects|
|Minimum export level||Not required||Not required|
|Belong to a strategic sector||Yes||Yes|
|Minimum employment level||Not required||Not required|
|Minimum required investment||$150,000 in fixed assets within FZ Park or $2,000,000 outside FZ Park||$10,000,000 investment in fixed assets (land is not included) to be completed in 8 years|
Free Trade Zone Regime Main Incentives:
|Income Tax Incentives||Period of Time||Law 7120||Law 8794: Small/Mid-scale Projects||Law 8794: Large-scale Projects|
|Income Tax (Statutory income tax =30%)||4 years||15%||15%||15%|
|Income Tax (Statutory income tax =30%)||8 years||0%||6%||0%|
|Income Tax Credit||No limit||Not available||10%||10%|
|Income Tax Deferral||No limit||Not available||Not available||Up to 10 years|
|Other Incentives||Period of Time||Law 7120||Law 8794: Small/Mid-scale Projects||Law 8794: Large-scale Projects|
|Import Duties||No limit||100% exemption||100% exemption||100% exemption|
|import and Excise Taxes||No limit||100% exemption||100% exemption||100% exemption|
|Remittances Repatriation Tax||No limit||100% exemption||100% exemption||100% exemption|
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