Costa Rica Business Overview

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Costa Rica remains one of the safest and most attractive countries for foreign investment in Latin America. The Costa Rican government, its ministries and financial institutions maintain a decidedly pro-U.S. and continental stance in regard to financial security and tax laws. The stated aim is to entice primarily high-tech corporations to take advantage of Central America's most educated, computer literate and disciplined workforce, along with the modern production infrastructure the country is currently creating. The economy is being transformed from its long-time dependence on coffee, bananas and cattle raising to one centered on microprocessor production and high-tech telecommunications services.

This investment-friendly climate and government policy of making Costa Rica "the Silicon Valley of Latin America" has enticed commercial leaders such as Acer, Microsoft, GE, Abbot Laboratories, Continental Airways and Intel Corporation to make sizable investments here, both financially and physically, with major production and distribution facilities. Western Union has chosen Costa Rica to host its Latin American regional operations center. In 1998, for the first time ever, Costa Rica is poised to earn more from high technology exports than from coffee or bananas or even its lucrative, thriving tourism industry.

The World Bank has given Costa Rica an excellent bill of overall political and economic health. At its annual conference in El Salvador this year, the bank lauded the country as possessing "one of the most stable and robust" democracies in Latin America. It went on to praise the Costa Rica's "healthy economic growth rate" and "some of the best social indicators" on the continent.

Costa Rica is one of the most vocal supporters of continental free trade, and already has its own agreement with Mexico and other countries of the region. Costa Rica's numerous free trade zones and tax holiday opportunities are extremely enticing. They offer benefits such as exemption from import duties on raw materials, capital goods, parts and components; unrestricted profit repatriation; tax exemption on profits for eight years and a 50 percent exemption for the following four years.

A study done recently for the Ministry of Foreign Trade (COMEX) projects that by the year 2005, Costa Rica's export earnings will amount to $15.7-billion, about four times the current figure. Intel will be leading the way; its exports, from the three manufacturing facilities the processing giant is building here, are expected to reach an annual $3.5-billion by the year 2001.

High-tech companies will spur the export boom, while traditional exports, such as coffee and bananas, will fall in percentages of overall figures, but in terms of revenue, will continue to grow.

Costa Rica is building a competitive advantage for itself and the many high-tech companies who have chosen or are pondering the option to operate here. It is a country at a turning point in integrating itself into the modern world economy. Those doing business here will have the inside track.
Among the more knowledgeable and helpful sources of information on investing and doing business in Costa Rica is the Costa Rican-American Chamber of Commerce (AMCHAM), composed over 1,500 representatives from more than 330 multinational and local companies.

CINDE, the Costa Rica Investment and Development Board, has been officially commissioned by the government of Costa Rica to be the main promoter and advisor to foreign investors. CINDE is a private, non-profit organization that provides complete and updated information on the economy and the business environment in Costa Rica, and helps in the initial contact with potential investors. It has an office in New York to provide tailor-made services. PROCOMER, the Foreign Trade Promotion Institute can help exporters understand relevant legislation, acquire export permits, seize the advantages of market opportunities and chart their way through related fields of endeavor. CADEXCO, the Costa Rican Exporters Chamber, provides information to entrepreneurs, private and public institutions on export procedures and requirements; trade barriers and how to overcome them; how to sell products abroad; information on export credit lines and export contracts, international prices, etc.

General Outline

If you would like to establish a foreign corporation in Costa Rica below are a few facts to consider.
Costa Rica is located in the centre of the American Continent and lies just above Panama. It has a total population of approximately 3,000,000. The capital and financial centre is San Jose.
Costa Rica is one of the most discreet centers in the world and enjoys economic and political stability making it a popular location.

Legal System
The legal system is based on the Spanish Civil Law.

Currency
The Colone, but the US Dollar is used freely.

Language
Spanish is the official Language of Costa Rica.

Disclosure of the Beneficial Owner
Although it is required to disclose details of the Beneficial Owner to the Government Authority, Blank Endorsed Shares allow for total privacy.

Taxation
Provided that the company activities are carried on outside of Costa Rica, the company will not be subject to any income taxes therein.

Double Tax Treaties
None.

Exchange Control
None.

Name Restrictions
The Registrar of Companies reserves the right to refuse any name which is identical or strikingly similar to an existing company or, in his opinion, inappropriate or undesirable.
Names must end with S.A., to denote limited liability.

Trading Restriction
A Costa Rican Company is not permitted to conduct or carry out Banking; Insurance; Fund Management; Investment or Asset Management; Trusteeship; or any associated activity.