Free Trade Zone beneficiaries in Costa Rica must be included in one or several of the categories specifically established by law.  As part of such categories, there are currently important service providers, commercialization companies, and manufacturing companies, such as the ones part of the flourishing Costa Rican medical cluster.

The Free Trade Zone Regime in Costa Rica was recently modified so  a specific type of manufacturing company, denominated “f) type manufacturing companies” could be included. Due to the elimination of benefits in favor of traditional manufacturing, which is scheduled for December 31, 2015 and according to specific changes made to the Costa Rican Free Trade Zone Law and its Regulations, on such date, companies of the “f” type will substitute traditional manufacturing companies within the Free Trade Zone Regime, but only for specific cases as explained further below.

This elimination of the Free Trade Zone benefits will not affect manufacturing companies of the “f” type, which are companies that according to the modifications to the Free Trade Zone Law and its Regulations have specific tax incentives notwithstanding the disappearance of tax incentives to traditional manufacturing companies at the end of year 2015.

The above indicated means that current traditional manufacturing companies have 4 options in order to keep being part of the Free Trade Zone Regime, as listed below:

1) If the company may be classified within one of the strategic sectors (specific investment categories set by the country), such as for example medical and high precision manufacturing companies, then the company may request, before July 2015 (which is considered by Procomer the deadline for filing the application), the transfer to the f) manufacturing category.

2) The company may also apply for a transfer of its place of operation outside the “Gran Area Metropolitana Ampliada” or “GAMA” (the “GAMA” or “Amplified Greater Metropolitan Area” is basically specific locations within the Central Valley). This means that the company would need to consider transferring its operation to locations such as Turrialba, Puntarenas, Limón, Orotina, specific locations in San Ramón, Grecia, etc.

3) The company may also apply as a “Mega Project”, which requires specific investments (a minimum of US$ 10,000,000.00) within a term of 8 years, and hiring and maintaining a specific number of employees.

4) Finally, the company may apply for a transfer of category, switching to a Free Trade Zone “Provider” manufacturing company regime, which requires the sale of at least a 40% of its total production to Free Trade Zone companies

Please note that only traditional manufacturing companies (specifically excluding companies providing services, engaging into commercialization activities, or manufacturing companies of the “f” type) will be affected by the elimination of their Free Trade Zone benefits as explained above.