The Free Trade Zone (FTZ) Regime is defined, in Costa Rica, as a set of incentives and benefits granted by the government to companies that comply with various requirements and obligations established in the Free Zone Regime Law, mainly related to operating in strategic sectors, investment and employment.

The Free Trade Zone Beneficiaries can be located inside or outside the Great Metropolitan Area and inside or outside Free Trade Zone Parks (Park Administrator Companies), and their investment obligations and certain benefits will depend on the location, being more lenient the investment requirements for those situated outside the Great Metropolitan Area and inside a Free Trade Zone Park.

Further, operating outside a Free Trade Zone Park (either inside or outside the Great Metropolitan Area), requires a higher investment and a more extensive approval process. However, there are certain categories that were created in 2022 that have very specific requirements, corresponding to items e), f) and g) below.

Companies that can obtain the Free Trade Zone Regime must be included in one or several of the following categories established in the Free Trade Zone Law:

a) Trading companies which simply handle (no manufacturing), repackage and/or redistribute goods.

b) Services companies within the strategic sectors defined by law and which comply with the Strategic Eligibility Index for Services Companies. Banking, financing and insurance entities cannot be FTZ beneficiaries, individuals nor entities providing professional services.

c) Park Administrator Companies of business parks destined to host companies under the Free Trade Zone Regime, as long as the parks comply with the infrastructure and provisions of services required by law.

d) Manufacturing companies within the strategic sectors defined by law, which can produce, process or assemble goods, whether such goods are exported or not, and shall comply with additional requirements established in article 21 of the FTZ Law. Further, manufacturing companies which are dedicated to mining extraction, exploration or extraction of hydrocarbons, producing or commercializing any type of weapons and ammunitions containing depleted uranium, or to generating electric energy, unless such energy is for self-consumption, cannot be FTZ beneficiaries.

e) Human Health Service Centers being located outside the Great Metropolitan Area and which comply with additional requirements established in article 21 of the FTZ Law.

f) Supplier/Provider Companies located outside the Great Metropolitan Area that provide/supply materials to other Free Trade Zone Manufacturing Companies, inside or outside the Great Metropolitan Area.

g) Companies developing sustainable adventure parks, located outside the Great Metropolitan Area, as long as they comply with an initial new investment in fixed assets of at least US$5,000,000.00 or its equivalent in local currency.

The Free Trade Zone Regime grants significant tax exemptions on importation of raw materials, equipment and materials, value added tax, income tax, municipal taxes, and others.

If you are interested in starting an operation in Costa Rica let us guide through this process. At Lang & Asociados we have more than 30 years of experience in this sector and have become one of the leading Law Firms in Costa Rica, which makes us the best choice for your project in the country.

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