We’ve been taking a look at Latin America’s booming Fintech sector and, to continue the series, here we check out Costa Rica.
Costa Rica serves as a hub and connection between Canada, United States, and Latin America, and its workforce stands out for levels of training, skills, and bilingualism. More, the government’s efforts to attract foreign investment make the Republic of Costa Rica a most interesting location for Fintech investment.
While the Costa Rican legislative and regulatory framework has a bit of work to do to catch up with technological development, the country has all the necessary ingredients to become an important Fintech hub. The population is strongly technology-literate, ranking above average for the region; back in 2017, the number of mobile cellular lines in the country was 179 per 100 inhabitants. Online services are now an economic staple, and the use of online banking is very high. And, perhaps most importantly, Costa Rican entrepreneurs have proven themselves creative and capable.
Further, in recent months, the country has instigated various measures to enhance the attractiveness of international investors. At the end of May it approved Bill 22607, which seeks to enhance Costa Rica’s competitiveness and attractiveness for Foreign Direct Investment (FDI).
As evidenced in Finnovista’s report ‘Fintech in Costa Rica’, Costa Rica is curious and paradigmatic – it has a population willing to use financial technologies (60% of the adult population have made payments through their mobile in 2019, higher than the LATAM average) though penetration of traditional banking is also higher, which differs from other Latin American countries.
More, the government’s efforts to attract foreign investment make the Republic of Costa Rica a most interesting location for Fintech investment
Of course, this doesn’t prevent Costa Rican Fintech’s from enjoying good health, which is partly due to two important aspects: the existing levels of talent in the country and the export capacity of Costa Rican Fintech. According to a report from PROCOMER, ‘Mapping the Fintech industry in Costa Rica’, Fintechs stand out for their export potential, and 60% already export.
In addition, Costa Rica has an innovation hub which supports this sector, known as the Financial Innovation Center (CIF).
So, what does the country offer in terms of taxation in the Fintech sector?
There’s no dedicated regulatory entity or specific law governing financial technology companies in Costa Rica. They’re regulated by a diverse set of laws, like Data Protection Law n°8968, the Law on Money Laundering and Activities for the Transfer of Narcotics n°8204, and the Law on the Regulation of Non-Banking Financial Companies n°5044.
Corporate income tax
The corporate tax rate is set at a maximum of 30% and there are withholding tax requirements on dividends, interest and fees.
Companies in Costa Rica can make tax payments through banking connectivity, both in private and state banks, all available online.
Banking platforms allow users to make programmable rebases so that tax payments are made automatically, either monthly or weekly, allowing individuals and taxpayers to avoid interest or other types of penalty for late payments.
VAT in Costa Rica is 13%, but there are different rates for specific services and goods. Companies in Costa Rica can make the payment of VAT through banking connectivity, available both in private and state banks.
Auxadi can help with every aspect of your Costa Rican operations. Get in touch with our San Jose office to see exactly how we can make your life easier.
Contact our team today to find out exactly how we can help you
Local Knowledge – International Coverage
Founded in 1979, Auxadi is a family-owned business working for multinational corporations, private equity funds and real estate funds. It’s the leading firm in international accounting, tax compliance and payroll services management connecting Europe and the Americas with the rest of the world, offering services in 50 countries. Its client list includes many of the top 100 PERE companies. Headquartered in Madrid, with offices in US and further 22 international subsidiaries, Auxadi serves 1,500+ SPVs across 50 jurisdictions.
All information contained in this publication is up to date on 2022. This content has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice.No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this content, and, to the extent permitted by law, AUXADI does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.