Although
Costa Rica is not an offshore financial center
in the traditional sense its favorable tax regime
means that it could have been classified as a
tax haven some decades ago. However it was not
until fairly recently that the Government became
aware of its tax haven potential and began actively
to both legislate for and market this sector of
economic activity.
Costa
Rica has many characteristics which give it a
distinct advantage over other offshore jurisdictions
including (as with Hong Kong) a perceived onshore
jurisdictional status, very low taxes (see Domestic
Corporate Taxation and Offshore
Legal and Tax Regimes for further details)
and a fiscal policy which does not discriminate
between residents and non-residents for tax purposes.
A
significant offshore banking industry does not
as yet exist principally because the industry
was only released from the shackles of state control
in 1996. The lively domestic banking industry
is described below.
There is no offshore insurance industry since
the insurance sector remains under state control
with significant political resistance being mounted
against its privatization
The
country's biggest low-tax sector is grouped around
the Free Zones (Export
Processing Zones) and other export incentive
programmes. These cover a wide variety of industry
and service sectors, but special mention is given
to the electronics sector below.
Costa Rica Banking
The state banking monopoly ended in 1995 and by
2009 there were more than 200 financial institutions
in Costa Rica, in addition to a rapidly growing
'offshore' banking sector. Banking matters are
governed by law No 1644 of 1953 as amended by
law No 7558 of 1995 (known as the Organic Law
of the National Banking System).
Financial
institutions in Costa Rica are regulated by the
Central Bank, through the General Superintendant
of Financial Entities (SUGEF). The revised legislation
reduced the reserve liquidity requirements to
15% of the value of the balance sheet, prohibits
loans to an individual customer which exceed 20%
of a bank's capital and specifies that a bank's
capital cannot be less than 9% of its loans.
Finance
and credit companies that take deposits from the
general public require a license from the central
bank and must have a minimum capital of 300 million
colons.
The
'offshore banking' sector, which consists of foreign
(for instance, Panamanian) banks which license
Costa Rican companies to provide services to them,
is virtually unregulated; such banks do not pay
the 15% withholding tax normally imposed on interest
payments. As of late 2008, the Central Bank was
promoting new regulations which would bring such
banks under its control.
Costa
Rica has strict banking secrecy laws. The banks
do not share any banking information with the
tax department or with any other Government departments
other than the central bank.
This
general rule is qualified by an exchange
of information agreement signed between the
United States and Costa Rica.
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Costa Rica
Electronics Sector
Costa Rica's Export Processing Zones and other
investment incentive regimes provide a nearly
tax-free environment for export-oriented companies
in a variety of industries, but the most high-profile
investor has probably been Intel, whose Costa
Rican chip-manufacturing facility exports nearly
$2bn worth of chips each year.
Apart
from electronics manufacturing operations, there
is a thriving software and it development sector
in San Jose, which appropriately shares its name
with Silicon Valley's main city.
The
Chamber of Software Producers of Costa Rica (Caprosoft),
created in 1998 by fifteen founding member software
firms, was able to obtain the first technical
cooperation project to increase the competitiveness
of a sector software granted by the Inter American
Development Bank (IADB) through its Multilateral
Investment Fund (MIF).
In
2003 Caprosoft developed an intense strategic
planning process which resulted in a broad national
vision for creating a solid ICT cluster. The planning
process and vision design took more than a year
to construct and yielded the Information and Communication
Technology National Strategy which was named:
'Costa Rica; Green & Smart'.
In
June, 2004, Caprosoft broadened its representative
remit by becoming the Costa Rican Chamber of Information
and Communication Technologies (CAMTIC). Many
of the organisation's members have substantial
export businesses and a number of factors have
assisted the growth of this industry, including:
the removal of import duties on computers in the
early 1980s; the availability of highly educated
labour; the small size of Costa Rica's internal
market which has driven companies to look for
business elsewhere; and the benign fiscal regime.
CAMTIC,
the Government and the Inter-American Development
Bank are co-operating to try to encourage the
growth of the software sector, particularly through
strengthening the supply of venture capital.
In
August, 2006, US computer firm Hewlett Packard
announced a major expansion of its call-centre
operation in Costa Rica, which already employed
3,300 staff at that time.
In
September, 2008, CAMTIC welcomed the government's
plan to create a National Plan of Formation of
Human Resource in IT.
"The
commitment of the Presidency to create a high
level commission that proposes this plan in three
months, is a fundamental step not only to improve
the competitiveness of the sector of Technologies
of Information and Communication (IT), but of
all the Costa Rican economy", said Alexander
Mora Delgado, President of CAMTIC.
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