On May 4, 2022, the "Law for the Strengthening of Territorial Competitiveness to Promote the Attraction of Investments outside the Greater Metropolitan Area (GAM)" (Law No. 10234) was approved, which aims to encourage companies to invest outside the GAM.

The law will become effective upon its publication in the official newspaper La Gaceta and must be regulated by the Executive Branch within six months after its publication. To achieve its objective, the law introduces the following relevant changes:

1. It provides that companies that are established outside the GAM and that make new investments may obtain the free zone regime, as long as they have not already been paying corporate income taxes (the law expressly excludes existing projects, companies operating under the FTZ that wish to move outside GAM, new subsidiaries, mergers, among others). In such a case, investments made by companies in public infrastructure (road accesses; bridges; sewage; energy, data, and communication transmission lines); educational centers; community care centers; and investment in human capital are included as new investments, up to a maximum of fifty percent of the committed investment.
2. Service companies (category "c" of Article 17 of the Free Zone Regime Law (LRZF)) must comply with the parameters established in the Strategic Eligibility Index for Service Companies, but the Executive Branch must introduce additional flexibility criteria applicable only to companies located outside the GAM.
3. Introduces three new categories in the list of beneficiary companies contemplated in Article 17 of the LRZF: Category (g) Companies of health service centers that are established outside the GAM. The benefit will be granted to companies specialized in ophthalmology, orthodontics, dentistry, cosmetic or reconstructive surgery and that make a minimum investment of $5 million (inside a free zone park) or $10 million (outside a free zone park). If the company provides high resolution hospital services, the minimum investment required will be $140 million; Category (h) Companies located outside the GAM supplying inputs destined, in a significant proportion, to other companies benefiting from the free zone regime under Category (f) and that make a minimum investment of $100.000 (within a free zone park) or $250.000 (outside a free zone park). In these cases, it will not be required that the company under Category (h) belongs to a strategic sector; and Category (i) Companies developing sustainable adventure parks located outside the GAM and that invest a minimum of $5 million.
4. Reforms Article 15 of the LRZF and establishes peremptory deadlines for the opening and operation procedures carried out through the One-Stop Investment Window for companies with projects outside the GAM. Once the established deadlines have elapsed, the “positive silence” will be applied according to the terms set forth in Article 7 of the Law for the Protection of the Citizen from Excess of Requirements and Administrative Procedures (Law No. 8220).
5. Authorizes the companies that administer free zone parks and the beneficiary companies of the regime, installed outside the GAM, to generate renewable electric energy for self-consumption.
6. Reduces the minimum investment amounts established in paragraphs (h) and (i) of Article 21 ter of the LRZF (referred to Category (f) companies), for beneficiaries that are established outside the park and outside the GAM, from $500.000 to $250.000.
7. Reforms the Rural Development Institute Law to allow it to provide land to the beneficiaries of Law 10234 and promote public-private alliances in rural territories.
8. Reforms the laws of Social Development and Family Allowances (“Asignaciones Familiares”), Organic Law of the Popular Bank and Communal Development (Banco Popular), Creation of the Mixed Institute of Social Assistance (IMAS), and Organic Law of the National Learning Institute (INA), to temporarily reduce the contributions of the companies that are beneficiaries of Law 10234, in the following terms:
   1. FODESAF: Total exemption of the 5% contribution on the payroll during the first five years of operation; payment of 1% during years 6 and 7; payment of 2% during year 8; payment of the general regime of 2% as of year 9. The benefit will apply only for the hires made as of the entry into force of the law.
   2. BANCO POPULAR: single contribution equivalent to 0.25% per month on the respective remunerations during the first 10 years of operation. As of year 11, the general regime will be applied.
   3. IMAS: Total contribution exemption during the first five years; for years 6, 7, 8, 9 and 10 the contribution will be 0.25% of remunerations. As of year 11, the general regime will apply.
   4. INA: It will apply a special rate of 1% on payrolls during the first 10 years of operation. After the 11th year, the general regime will be applied. This benefit will not be granted to companies located in the cantons of Palmares, Sarchí, Grecia, San Ramón and Naranjo. To be eligible for the benefit, the company must permanently generate at least 30 direct jobs or provide training programs to its employees or aspiring employees in the locality.
9. Finally, the law orders the Government to take advantage of the free zone regime to strengthen development poles outside the GAM through the creation of action plans aimed at generating the necessary services, infrastructure, and operating conditions. Likewise, the INA is urged to promote academic offers that respond to the technical-professional needs of the companies installed in the country and that are in accordance with the areas of greatest labor demand, giving priority to the development poles outside the GAM.

By Francisco Chacón

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Related Practice Areas:

• Taxation
• Free Trade Zone Regime