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Congress studies bill for a partial reform of the Free Trade Zone Regime

Congress studies bill for a partial reform of the Free Trade Zone Regime

Currently, through the Government and Administration Commission of the Costa Rican Congress, the bill called "LAW FOR STRENGTHENING TERRITORIAL COMPETITIVENESS TO PROMOTE THE ATTRACTION OF INVESTMENTS OUTSIDE THE GREAT METROPOLITAN AREA (GAM)" is being analyzed. - File No. 22,607- seeking to partially reform our Free Trade Zone (FTZ) regime.

The main purpose of this law is to promote foreign direct investment outside the Greater Metropolitan Area (GAM), through companies established to carry out activities that generate inputs, health service centers, sustainable adventure parks, and conservation activities or scientific research under the FTZ.

To apply to the free zone regime under these activities, new investment will be considered any investment that exceeds US $ 100,000.00 within and industrial park or US $ 200,000.00 outside an industrial park and that are relative to:

  1. Public infrastructure (Improvement or construction projects, for example, road access, construction and conservation of bridges, sewerage, drinking water supply networks; installation and improvement of power, data and telecommunication transmission lines, construction, improvement or conservation of the infrastructure of educational centers and community care centers, located in the canton where the company is installed)
  2. Investment in Human Capital, (closing gaps, Research and Development, new skills for the transformation of the activity).

It is important to note that for sustainable adventure parks outside of GAM the new investment will have a differentiated treatment, being this of US $ 2,000,000.00 outside the industrial park and for health centers, the investment within the industrial park will be US $ 5,000,000 and of US $ 10,000,000 outside the industrial park. There will be a period of 5 years to make said investment, unlike within the GAM, which only has 3 years.

Service companies that wish to establish themselves outside the GAM must also comply with the Strategic Eligibility Index for Service Companies (IEES for its initials in Spanish).

One of the greatest benefits for this type of company will be the new tax treatment that will be given to them in terms of income tax, since they will enjoy a 100% exemption while they remain within the FTZ; regarding the goods and services of these companies that are destined for the local market, all the corresponding taxes on consumption will be applicable.

For the application to the FTZ, the Single Investment Window (VUI for its initials in Spanish) will be enabled, and is expected to drastically reduce the terms for obtaining construction and operation permits, SENASA, SETENA, INS, municipal patent, CCSS, Single Tax Registry, Migration and water availability.

One of the novelties that this bill brings is that the management companies of Free Zones Parks located outside the GAM will be able to generate renewable electricity for self-consumption of the common areas as well as the energy needs of each of the companies installed.

This Project reiterates that banks, financial entities, insurance companies, companies that carry out mining extraction, the exploration or extraction of hydrocarbons, the production or commercialization of weapons, as well as natural or legal persons that provide professional services will not be able to avail themselves of the benefits of this Regime (except in the last case, if they are health services in centers outside GAM).

We will closely monitor the progress of this bill in order to keep our clients informed.

By Carla Baltodano y Josué Monge

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