Costa Rica: Country and Foreign Investment
Costa Rica offers an attractive and stable environment in which to establish a business. Although Costa Rica telecommunications and transportation infrastructure are state controlled and in need of investment they are nonetheless the best in the region.
A branch of a foreign company operating in Costa Rica must appoint a Costa Rican resident as its legal representative with full power of attorney on matters concerning the business of the branch.
Apart from establishing an appropriate corporate form (see Forms of Company), setting up and running a business in Costa Rica will require application for a business license (patente comercial) from the local Municipality (Departamento de Patentes) where the business is to operate, registration with the Costa Rican Revenue Administration (Direccion General de Tributacion Directa), and if there are to be staff, registration of the company as an employer under the Costa Rican Social Security System (Registro Patronal bajo la Caja Costarricense del Seguro Social).
The 1995 General Customs Law introduced reforms aimed at streamlining what up until then had been complex and bureaucratic customs procedures and much of the necessary processing is now accomplished electronically or through a one stop system. Import tariffs have also been substantially reduced.
The free trade zone areas offer a range of fiscal incentives which have had the effect of transforming the direction of the national economy (see Free Trade Zone Industry). However, many of these tax advantages are due to be phased out by 2015, under Costa Rica's WTO commitments.
There is a relatively sophisticated legal infrastructure in place with businesses having a wide choice of structures under which to operate (see Forms of Company), including limited partnerships, limited liability companies and sole proprietorships. Although Costa Rica is a civil code jurisdiction trusts can be created under its Commercial Code.
Costa Rica has traditionally not been party to double taxation treaties. However it has signed an exchange of information treaty with the United States, and DTAs are now under negotiation with several other countries. The banks do not share information with the tax department or with any 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.