Free Trade Zone Tax Exemptions
Companies doing business in a Free Trade Zone receive the following tax exemptions, as long as they cannot claim their Costa Rican-exempted taxes as a business expense in another country.read more close
Import Customs Duties & Tax Exemptions:
A FTZ company receives 100% Customs duty and tax exemption on:
Imported raw materials, capital goods, parts and components, materials for packing, containers, and any material/product that is required for the company to operate in a Free Trade Zone. (1)
Imported machinery, equipment, their accessories and parts, as well as the import of vehicles for the company, including trucks, chassis for trucks, single cabin chassis, 1-2 ton capacity pickups, and any vehicle that can transport a minimum of 15 passengers. (2)
Imported oils, lubricants, and gas required for a company to operate. (3)
Imported products for commercial or industrial samples.
(1) If a company needs products, raw materials, and/or services that are available in Costa Rica, it must purchase them in Costa Rica. However, if the company can prove that those products, raw materials, and/or services do not meet the quality, pricing and delivery time that the company requires, it will be able to import them free of tax.
(2) A company may re-sell or transfer ownership of items purchased for the company, without paying any taxes, five years after the date that of import. If the company sells vehicles to a person, the person must pay all the necessary transfer taxes and customs duties.
(3) A company receives these exemptions as long as the products do not exist in Costa Rica and/or are not the same in quality and/or quantity as those required by the company. A company must file a petition with the Ministerio de Economia, Industria y Comercio to import these products if they exist in Costa Rica. Approval will be granted 15 days after your submission.
Export Duties & Tax Exemptions:
A company will receive 100% export duty & tax exemptions on:
All re-export equipment and machinery used in its business facilities in Costa Rica
Exported commercial or industrial samples.
A company will receive 100% local tax exemption on:
Local taxes on the company's capital and/or net assets
Local property taxes for ten years starting on the date the company begins operations
Local real estate or capital transfer taxes for ten years starting on the date the company begins operations
Local purchases (on good & services) sales taxes
Local purchases (on good & services) consumer taxes
Local taxes on utilities
Taxes levied on remittances abroad*
(*) This does not apply to companies that handle, wrap, or redistribute a non-traditional Costa Rican product.
Income Tax Exemptions:
Income tax exemption percentages are based on the Free Trade Zone in which a company does business:
If the company is located in a Free Trade Zone with a high development rate, it will receive 100% income tax (income from dividends, capital gains, and profits) exemption for eight years, and 50% exemption for an additional four years.
If the company is located in a Free Trade Zone with a low development rate, it will receive a 100% income tax (income from dividends, capital gains, and profits) exemption for 12 years, and 50% exemption for an additional six years.
The development rate for FTZs is determined by the number of companies based in the Free Trade Zone and the number of people they employ. The greater the number of companies and jobs opportunities, the higher rating the Free Trade Zone receives.
U.S. citizens can deduct from income tax expenses incurred for attending business meetings or conventions in Costa Rica.
Source: Ley 7120 and CINDE