Costa
Rica Double Tax Treaties
Costa Rica has traditionally not been a party
to any double taxation treaties. However it has
signed an exchange of information treaty with
the United States with a view to promoting the
necessary interchange of tax information and to
ensure that the correct level of taxation is levied
in both countries as well as to eradicate tax
evasion.
In
April, 2006, however, as the country mulled a
controversial switch from a territorial tax system
to one where it would collect tax on worldwide
income, it emerged that the authorities had begun
negotiations with several countries to avoid the
double taxation of income.
By
2009 Double Taxation Agreements has been signed
with Spain, Germany and Romania, but these are
awaiting ratification. Negotiations are continuing
with Israel, South Korea, Switzerland and Canada.
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Costa Rica
Other International Agreements
Mutual
Assistance Treaties: Other than the exchange
of information treaty signed with the United States
Costa Rica has no mutual assistance treaties with
any other countries. The banks do not share any
banking information with the tax department or
with any other Government departments other than
the central bank. Civil and criminal implications
attach to the disclosure of any information received
by a lawyer and disclosed without proper authority.
Free
Trade Agreements: In
2004 Costa Rica concluded negotiations to participate
in the US-Central American Free Trade Agreement
CAFTA). The agreement was ratified in a popular
referendum in October, 2007, but problems over
the legal basis of the agreement, which had been
accepted by all other parties, delayed final implementation
until December, 2008.
United
States Trade Representative (USTR) Susan C. Schwab
made a statement on December 23 regarding the
entry into force of the Dominican Republic-Central
America-United States Free Trade Agreement (CAFTA-DR)
for Costa Rica, saying: "With the President’s
issuance of a proclamation to implement the CAFTA-DR
for Costa Rica as of January 1, 2009, I am very
pleased to be able to celebrate the entry into
force of this important multi-country agreement."
“We
have worked closely with Costa Rica, as we have
with our other CAFTA-DR partners, to ensure they
meet their obligations and responsibilities under
the agreement. Costa Rica is now ready to join
the Dominican Republic, El Salvador, Guatemala,
Honduras and Nicaragua in putting the agreement
into force, ensuring that the benefits of this
agreement continue to spread. US trade with CAFTA-DR
partners, and among CAFTA-DR partners, has increased
as the countries have put the agreement into force,"
she continued, adding:
“I
greatly appreciate the diligent effort by [Costa
Rican] President Arias and his government to adopt
legislation and regulations to implement Costa
Rica’s commitments under the CAFTA-DR. This
step marks an important milestone in our relationship
with Costa Rica, building on our strong economic
and political partnership. With the addition of
Costa Rica, this important regional free trade
agreement will be in effect, as of January 1,
2009, for all of the countries that signed the
agreement.”
Under
CAFTA, 80% of US exports of consumer and industrial
goods will become duty-free in Costa Rica, El
Salvador, Guatemala, Honduras, Nicaragua, and
the Dominican Republic, immediately, with remaining
tariffs phased out over 10 years.
The
government of President Oscar Arias faces an uphill
battle in its quest to pass a package of 13 laws
required as part of the CAFTA agreement, especially
the more controversial parts that will open the
state telecommunications and insurance monopolies,
with opposition lawmakers likely to demand concessions
such as increased farm subsidies.
In
August 2007, it was announced that President Arias
was to sign a free trade agreement with Panama
which will reduce tariffs on most industrial and
agricultural goods traded between the two countries
over the next decade.
The
agreement aims at the removal of tariffs on 93%
of industrial and agroindustrial products, although
barriers on certain industrial goods are not scheduled
to phase out completely for eleven years, while
some agricultural products will have schedules
for reduction of duties as long as 16 years.
The
agreement also opens up Costa Rica's monopolistic
telecoms market to Panamanian operators, although
the the Instituto Costarricence de Electricidad
will be able to offer services in Panama.
While
not nearly as controversial as the much-debated
CAFTA, the FTA with Panama nonetheless sparked
demonstrations from anti-trade agreement protestors
in Costa Rica.
Bilateral
Investment Treaties: Costa
Rica has bilateral investment treaties already
in effect with countries including: Canada, Chile,
Great Britain, France, Spain, Germany, Switzerland
and Taiwan, Korea, Venezuela, Paraguay, Argentina,
the Czech Republic and the Netherlands.
Treaty
negotiations are also at various stages with Bolivia,
Ecuador, Belgium, Luxembourg, Finland, Poland
Austria, Barbados, Brazil, Denmark, United States
of America, Greece, Ireland, Jamaica, Italy, Norway,
Peru, Portugal, Romania, Sweden and Uruguay.
In
November, 2005, Kenneth Valley, Trinidad & Tobago's
trade minister, and Manuel Gonzalez Sanz, his
Costa Rican counterpart, signed a comprehensive
bilateral free trade deal under which will eventually
eliminate tariffs on all goods traded between
the two nations.
The
deal removed tariffs on 90% on goods traded between
the two nations immediately, while tariffs on
all remaining goods were set to be removed over
the coming four years.
"This
agreement with Costa Rica is a pioneering effort
providing the opportunity for us to develop access,
investment, and dispute settlement among others,"
Minister Valley observed.
The
deal also aimed to provide Costa Rica with access
to the Caribbean Community (Caricom), which is
in the process of establishing a free market,
and of which Trinidad was one of the first participants.
"We
export more to the Caribbean than all of South
America and look forward to Trinidad & Tobago
influencing other countries to get on board,"
Mr Gonzalez Sanz stated.
In March 2009, anewly reached
'open skies' air transport agreement with Canada
was announced.
"This new agreement
is a win-win for Canada's air travel industry
and consumers", commented Canada's Transport
Minister, John Baird, who added:
"This announcement
is another example of our Government's commitment
to forming partnerships with other countries,
offering competitive airline prices to travellers
and boosting our economy."
Canada's Trade Minister
Stockwell Day continued:
"This agreement will
bring Canada and Costa Rica to a new level of
economic co-operation."
"It will help create
new jobs for our economy, expand market potential
for our businesses and build connections for our
citizens. This agreement is a another demonstration
of our government's commitment to further engagement
with the Americas."
The Canada-Costa Rica air
transport agreement - which was officially concluded
on February 17 - allows airlines to operate own–aircraft
and code-sharing scheduled air services between
any bilateral city–pair.
Code-sharing is a type
of air service which allows an airline to sell
seats in its name on the flights of another airline.
This agreement also allows airlines greater flexibility
in scheduling and pricing of flights. In conjunction
with these services, airlines will also be permitted
to sell services between each other's country
and third countries.
In April 2009, the first
round of negotiations for a Free Trade Agreement
(FTA) between Singapore and Costa Rica were concluded.
The talks took place in
Singapore between April 20-22, and focused on
drawing up a package of measures to liberalize
trade in goods and services, as well as looking
at ways to simplify customs procedures and promoting
reciprocal investment.
The two countries have
also expressed hope that the FTA will reduce the
technical barriers to trade that currently exist
between the two countries.
The next round of negotiations
on the matter was due to be held in Costa Rica
at the end of that year.
"Satisfactory progress"
has been made at the third round of negotiations
for a Free Trade Agreement (FTA) between China
and Costa Rica, it has been announced.
The announcement was made
by Chinese officials after commercial delegates
from both countries met in Costa Rica between
June 15-17 for the third round of trade talks.
According to China's Chief
Negotiator, Zhu Hong, this round of talks has
resolved several issues in time for the fourth
meeting to be held in September.
"The Costa Rican side
has promised us that the offer will be better
in the coming round," Zhu announced, adding:
"We had a good discussion
on almost all the issues like services, commercial
defense, controversies solutions, commercial values
and other issues of cooperation."
FTA discussions between
the two countries began in June 2007, making Costa
Rica the third Latin American country to date
to enter into trade agreement negotiations with
China.
In November 2009, Argentina
signed a tax information exchange agreement with
Costa Rica, in an effort to tighten up on undeclared
bank accounts held offshore by Argentine residents.
"With the signing
of these accords we take a quantum leap in the
fight against tax evasion and fraud, and it is
a way of enhancing the transparency of international
trade," stated the head of the Argentine
tax agency (AFIP), Ricardo Echegaray.
The agreement signed provides
for the exchange of information on request, which
includes information held by banks, other financial
institutions, and any person acting as an agency
or in a fiduciary capacity, and information associated
with ownership of companies. It also envisages
the possibility of tax authorities conducting
overseas audits.
China and Costa Rica concluded
the sixth and final round of negotiations towards
a free trade agreement on February 10. The three-day
meeting focused on finalizing a list of products
that will be exclusive of trade tariffs, and rules
that will govern intellectual property.
On the conclusion of the
year-long negotiations, Fernando Ocampo, Costa
Rica's Chief Trade Negotiator, said to reporters
that the agreement would bring great opportunities
for Costa Rican exporters. Upon the agreement’s
entry into force, exports from Costa Rica will
be given priority treatment, with exemptions from
pre-existing trade tariffs for all products but
sugar. Under the agreement, tariffs will be removed
on 58% of Chinese goods.
Bilateral trade has been
going from strength-to-strength since the two
countries established diplomatic ties in June
2007 when Costa Rica reversed its longstanding
allegiance with Taiwan to establish trade ties
with mainland China. Since then, trade has increased
markedly, amounting to USD3.18bn in 2009.
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