Costa Rica continues to launch initiatives to highlight and develop its potential for multinational companies, positioning itself as a HUB for international companies in Central America. At the end of April 2022, the country approved Bill 22607, which seeks to enhance Costa Rica’s competitiveness and attract Foreign Direct Investment (FDI).
Bill 22607 is known as “Law on strengthening territorial competitiveness to promote the attraction of investments outside the Greater Metropolitan Area (GAM)”, launching several incentives established to improve territorial competitiveness outside Costa Rica’s central valley, streamlining procedures and extending the region’s possibilities for industries with potential. Agribusiness, manufacturing, tourism infrastructure and services can be developed in the non-metropolitan regions – where almost half of the country’s population lives.
Among the incentives in the Bill: the reduction of the initial investment required for companies that settle outside the GAM (now $250,000); the introduction of new types of investment that can be accounted for (such as human capital or public infrastructure); and the strengthening of the Single Window of Investment (VUI).
Looking at tax incentives, temporary reductions include the payment of social security contributions to the Mixed Institute of Social Assistance (IMAS), the National Institute of Learning (INA), the Popular Bank, and the Fund for Social Development and Family Allowances (FODESAF). The Bill also provides for a five-year exemption from contributions.
This promotion of new investment projects applies to both national and foreign companies that set up their operations outside the GAM under the free zone model, and thereby promote and generate formal, quality employment outside Costa Rica’s metropole.
These measures are intended to encourage new investment, not promote the movement of existing companies in search of tax relief.
For more information about these new measures and the other benefits Costa Rica offers, contact our experts in Costa Rica.