Free Trade Zones: Advantages and Disadvantages

Free Trade Zones: Advantages and Disadvantages

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Business - Starting a Business

 Advantages:

  • Re-investment Incentives

  • Customs Preferred Point of Entry and Exit

  • Access to Local Markets

  • Miscellaneous Benefits

  • Tax Exemptions

 

Re-investment Incentives:

Companies doing business in a Free Trade Zone for four years consecutively that invested less than $2,000,000 (two million dollars) and want to re-invest in Costa Rica can receive additional income taxes exemptions as follows:

If the re-investment is more than 25% of the original investment, the tax exemption will be one additional year.

If the re-investment is more than 50% of the original investment, the tax exemption will be two additional years.

If the re-investment is more than 75% of the original investment, the tax exemption will be three additional years.

If the re-investment is more than 100% of the original investment, the tax exemption will be four additional years.

Customs Preferred Point of Entry and Exit:

Most Free Trade Zones have their own Customs Preferred Point of Entry and Exit to file all the necessary paperwork to export your products. The Costa Rican government now has available to export companies and their export representatives an Automated Export System (AES) that allow businesses in Free Trade Zones to file export declarations electronically 24 hours a day, seven days a week.

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Access to Local Markets:

Companies that manufacture, process, operate, produce, repair, maintain, or ensemble a product to be exported worldwide in an Free Trade Zone in Costa Rica can sell up to 25% of the total sales into the Costa Rican local market.

Solution partners to export companies that assess at any level the manufacturing process of products to be exported for customers based in a Free Trade Zone in Costa Rica or outside of Costa Rica can sell up to 50% of the total sales into the Costa Rican local market.

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Miscellaneous Benefits:

The following benefits are available to you for a fee. The fee varies depending on the Free Trade Zone you in and the services that are rendered there.

Network, Internet, and other related Services
T1 and ISDN services are available upon request in most Free Trade Zones.

Garbage Collection
Garbage collection is twice a day at 7am and 1:30pm. Other schedules may be available upon request.

Consulting Services
Consulting Services are Available Regarding:

  • Import of raw materials, machinery and equipment

  • Re-export of merchandise

  • Local purchases

  • Sale of merchandise and services to companies under special export laws

  • Subcontracting with local companies

  • Transfer of materials among companies under the Free Trade Zone, and service to satellite plants.


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Childcare
The Free Trade Zone's administration pays up to 30% of childcare services. Your company must pay the difference.

Childcare Services Include:

  • Basic English Language Education

  • Breakfast and Lunch

  • Education at nursery, pre-kindergarten, kindergarten and preparatory level

  • Medical and Psychological services

  • Professional personnel service throughout the year

  • Small groups

  • Summer courses and field trips

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Medical Services
Preventive medicine is available Monday through Friday and includes:

  • Basic environmental deputation

  • Comprehensive clinical history and exams

  • Coordination and cooperation with occupational health committees

  • Early detection of uterus and breast cancer

  • Educational programs about personal and mouth hygiene and sexual education

  • Emergency and labor services

  • Ergonomic assistance

  • Family planning and counseling

  • Growth and development/control of children

  • Identification assessment and classification of professional risks

  • Injections, dressings, nebulizations

  • Inspection of companies' facilities

  • Laboratory Exams

  • Prenatal care

  • Preparation of prescriptions

  • Regular medical checkups

  • Reproductive health

  • Vaccination programs

  • Workshops including childbirth preparation courses, first aid, occupational health & industrial hygiene

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Recruitment Services
Each Free Trade Zone's Administration has its own database of professionals ready to fulfill your human resources needs.

Security Surveillance

  • Surveillance of the common areas of the Free Trade Zone, and surroundings

  • Control of vehicles circulating inside the area.

  • Control of pedestrians entering the area.


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General Maintenance Services
Includes:

  • Cleaning of parking lots and loading

  • General building and common areas maintenance

  • Landscaping (customized upon request)

  • Lawn mowing (outside gardens)

  • Maintenance of Free Trade Zone's roads

  • Maintenance of green areas

  • Regular inspection of WCs

  • Administrative Support

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Delivery Services
Services are available twice a day at 9am and 2pm.
Services Include:

  • Bank deposits and collections

  • Delivery of Correspondence

  • Payments

  • Payroll

  • Supermarket shopping

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P. O. Box Services
Rental of Post Office boxes is available on a twelve-month lease basis.

Car Wash Services
Car wash services are available upon a 24 hours advance notice.

Temporary Admission System
You can import partially manufacture products in the Free Trade Zones to finish them in Costa Rica and immediately export them as a new finish product.

Read About More Advantages... Tax Exemptions

 

Disadvantages of Free Trade Zones

Companies in the retail, wholesale, marketing, advertising, dealership, distributorship, or tourism business may not find the Free Trade Zones the most effective location to do business in Costa Rica. Those businesses will not get any significant exemptions. Neither will they be able to sell more than the 25% of their production to the Costa Rican market nor will they get any exemptions while selling their products on the Central American Market.

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