Doing business in Costa Rica

The economic, political and social stability, are some of the characteristics that have distinguished Costa Rica, giving way to successful achievement in  attracting foreign investors. In Central America, Costa Rica is one of the largest recipients of foreign direct investment (FDI). Costa Rica's tax incentives and benefits are standardized. They apply to any and all companies according to their operation, so there is no need for negotiation on a per-case basis.

The government of Costa Rica has introduced a variety of incentives in an effort to promote foreign investment including Law No. 7210 of Free Trade Zones (http://www.procomer.com/en/freetradezone-exporting) enacted in 1990. The law and its consecutive reforms provide significant tax exemptions and incentives for
companies operating in export-related activities. A minimum initial investment of US$150,000.00 in fixed assets is required and must be completed within the first three years after the date of notification of the agreement granting the regime to the company.

The investment incentives include constitutional guarantees of equal treatment and direct foreign investment. Other incentives are: export contract, the free zone and temporary admission system, which include full or partial exemptions from taxes and streamline customs clearance services including simplified operational aspects. Some tax exemptions established in article 20 of the FTZR Law are the following, but not limited to these:

• Introducing to the FTZ the raw materials, components and packaging; machinery and equipment, imports
• of motor vehicles required for their operation, production, management and transportation.
• Exemption from all taxes associated with the exportation or re-exportation of products.
• Exemption for a term of 10 years counted from the start of the operations from payment of taxes on
• capital and net assets, from payment of property taxes and from payment of the tax on transfer of real
• estate.
• Exemption from sales and excise taxes on purchases of goods and services.
• Exemption from all taxes on remittances abroad.
• Exemption from all taxes on profits.
• Exemption from all municipal taxes and licenses for a term of 10 years.
• Exemption from all taxes on imports and exports of commercial or industrial samples, upon prior authorization.
• The export processing companies, beneficiaries of the Free Zone Regime, which after four years of operating under such Regime do reinvest in the country can receive an additional exemption from payment of income taxes. 

Costa Rica has free trade agreements with numerous countries allowing to benefit from export incentives when established in FTZ. The Costa Rican investment promotion agency CINDE - Coalición Costarricense de Iniciativas para el Desarrollo, is a private nonprofit organization that assists and guides investors and companies in establishing operations in Costa Rica, having a track record of attracting about 250 companies. 
 

Last update 27/03/2017

The Costa Rican Food Industry Chamber – CACIA is the trade association of the food industry sector which produces a catalog of the different players in the field called Directorio Industrial with its last edition printed in 2016. CACIA organizes an annual trade show and congress for the food industry which is usually held in March. For further information, please refer to EXPOCACIA.

Among the major food and ingredients import and distribution companies that can provide entry into the points of sale for the food service sector are Ciamesa, Belca, Mayca / Sysco, and Pedro Oller. These companies are the main source of imports for wholesalers, supermarkets, grocery stores and restaurants. The distribution network is very short, from importers/distributors to supermarkets or other retail chains.

The following chain of supermarkets exists in Costa Rica: Walmart in different formats, convenient store chains AMPM, and other chains. The higher end chain is AutoMercado and lower to middle end supermarket chain Megasuper.

Last update 16/06/2017

The Costa Rican dairy sector is highly protected to the point that most dairy products do not have tariff deductions covered by the Association Agreement between Europe and Central America. Data on imported value of cheese into Costa Rica can be found in the source http://www.trademap.org/ for imports of NCM 0406 -Cheese and curd in US dollars,

An Euromonitor study on cheese market in Costa Rica(Sept. 2016) states:

In spite of the increasing penetration of imported brands at modern grocery outlets, local consumers maintained a clear preference towards the best-selling value for money options available, which included the traditional local fresh cheese Turrialba and the popular spreadable processed cheese options that are positioned as “American Style” cream cheese. As a result of the current exposure to global consumption trends and the penetration of better priced imported products (in the reference frame of free trade agreements), leading local manufacturers such as Dos Pinos and Sigma Alimentos, continued to invest in developing additional line extensions of more premium products, while maintaining solid volume growth thanks to the strong position and wide availability of their more traditional formats.

COMPETITIVE LANDSCAPE:

Dos Pinos retained the lead in cheese sales during 2015, accounting for 46% of value sales. Besides its strong top of mind reference and deep penetration amongst middle-income consumers, this manufacturer’s capacity for constant innovation and segmentation has helped it to maintain the pace of the new competitive challenges derived from free trade agreements and the increasing pressure from international manufacturers.Dos Pinos takes advantage of its cooperative business model, which has significant tax benefits in Costa Rica while providing it from a vertically integrated business model, which allows it to be very competitive in terms of unit prices and cost efficiencies. Sigma Alimentos which accounts for a 34% retail value share, benefiting from the strong brand
positioning of its cheese brands Monteverde and Del Prado, which also take advantage of this manufacturer’s economy of scale savings in terms of production and distribution…”

PROSPECTS:

Further levels of segmentation shall consolidate as the main sales driver within a relatively mature category in Costa Rica over the coming five years, when instead of seeing strong growth in volume terms, value sales are expected to rise. This scenario shall continue to unfold during the forecast period given the increasing globalised context that promotes the development of value-oriented proposals capable of suiting the taste preferences and quality expectations of an expanding base of middle- and high-income consumers, which have access to regional culinary trends and are willing to pay higher unit prices for the right value proposals (including artisanal brands, low calorie products and organic options).

In Costa Rica the most updated sources of information regarding importers, distributors or dealers are the commercial representations of the Member States, European bi-national Chambers of Commerce and the national Chambers. All of these offer services related to the identification of potential partners for the marketing of products and services in Costa Rica.

The Chamber of Technology Information and Communication Companies – CAMTIC - is the representative association of the sector. Contact information is email info@camtic.org.  Together with the Agency of Promotion of Exports, PROCOMER and the Association CAMTIC have generated a mapping sector of digital technology companies in which they had encountered 897 companies in 2014. The study can be accessed via registration online: http://investigacionticcr.com/ 

There are nearly 70 universities (of which 5 are public) for training in the ICTs sector. In addition, the National Institute of learning (INA, www.ina.ac.cr) provides intermediary training and includes ICT studies in its programs.

The annual trade show for ICTs is called ExpoTelecom (http://www.expotelecom.net/).

Last update 27/03/2017

Registration
Your product should have the sanitary registration filed at the Ministry of Health via the online platform REGISTRELO before importing in order to obtain the authorization of custom clearance. Registration is only available online and requires that the legal representative, or power-of-attorney person to hold an electronic signature (FIRMA DIGITAL). We recommend your company to do this through a local representative. The registration can be realized as fast as 5 to 15 days and has an average cost of $20 per product line. Validity of the registration is 5 years.

Tariff and import duties
Gelatin and their derivatives in Costa Rica correspond to the following 10-digit harmonized codes:

• 3503.00.1010 (gelatin and its derivative for manufacturing of veterinary pharmaceuticals)
• 3503.00.1090 (other gelatins and their derivatives)
• 3503.00.90 (Others).

The above headings do not have any import duties but have a 13% sales tax applied. Documents required at customs are the following:

• Authorization of custom clearance for food by Ministry of Health (issued according to sanitary registration)
• Certificate EUR.1 issued by EU member state customs authority or only invoice declaration if less than 6000 euros.
• Technical Note #44 issued by the Ministry of Agriculture, Department of Animal Health (given it is a product derived from animals).

Last update 16/06/2017

The public health system is centralized in the Costa Rican Social Security Fund (CCSS). Purchases are made through a bidding process, for which you must first be registered as a supplier (http://www.ccss.sa.cr/tramites?t=31). Purchases are centralized, generally, however there is a limit of purchase and certain type of products that are purchased in each hospital or clinic. We recommend working with importers and distributors of recognized trajectory in Costa Rica with sales experience to the CCSS.

All imported products require their sanitary registration corresponding to the regulations regulated by the Ministry of Health (https://www.ministeriodesalud.go.cr/index.php/tramites-ms/registro-de-productos-deinteres-sanitario-ms?id=637). The procedure is carried out online and its validity lasts 5 years. 

Information on the market capacity of the health sector:
Costa Rica has a socialized health system, identified as the CR Social Security system (CCSS , http://www.ccss.sa.cr/licitaciones). This system includes 30 hospitals: 10
general hospitals, 7 regional hospitals and 13 peripheral hospitals, which may vary in size. 16 of the hospitals are located in the Central Valley region of the country, where about half of the population lives. In addition, the CCSS is responsible for approx. 500 clinics and approx. 1,000 small service units with only equipment in
remote areas of the country.The CCSS hospitals have approximately 6,000 beds, while there are approx. 223 beds in three private clinics /hospitals.

There are several private hospitals and clinics in the country, mainly in the Central Valley. Hospital Clínica Bíblica (HCB) is the largest followed by Hospital CIMA and Hospital Hotel La Católica (HCC). These three private hospitals are accredited by the International Joint Commission (JCMI). The HCB is also accredited by medical tourism associations. Hospital CIMA and Hospital Clínica Bíblica are building new facilities in the province of Guanacaste. Hospital Metropolitano, in San José center, accredited by the Association for ambulatory medical care (AAAHC), is the most recent hospital and among its services offer assistance, accept medical insurance
under the program of foreign doctors (FMP) and Tricare.

The number of small, private clinics is constantly growing, that the population demands health services faster and better. The largest private clinics in CR are Santa Catalina Clinic, Santa Rita Clinic, Santa Fe Clinic and Jerusalem Clinic Hospital. The influx of foreigners, mainly from North America (USA and Canada), is also contributing to this private growth, in what is often called "medical tourism".

Last update 27/12/2017

The sanitary registration of cosmetics is mandatory in order to import and commercialize in Costa Rica. The importer must process the registration in the Ministry of Health of Costa Rica via the online platform REGISTRELO for which the person must have a DIGITAL SIGNATURE.

The European company can make a power of attorney by authorizing a local agent to carry out the process on their behalf, which will require demonstrating the agreed relationship. The required documentation must be duly apostilled in the country of origin. For your information, the Ministry itself provides a Manual for the Registration of Cosmetics that details the process to register online in the platform. In turn, you will find on the website of the Ministry of Health the regulations and regulations related to cosmetics.

The duration of the registration process is approximately 20 days, counted from the day of delivery of the required documentation and the approximate cost is $100 per product family. Its validity is five years and the registration is valid from the moment the product is registered. Since 2016, a fast-track system has been established for the registration of cosmetic products that do not present a risk by being identified in the Annex of Regulation No. 39471-S "Procedure for Simplified Registration of Cosmetic Products and Low-Risk Food, Requirements, Control and Surveillance".

Last update 27/12/2017

Costa Rica's labelling regulations are bound to the Central American Council of Ministers (COMEICO) resolutions. Labelling requirements are indicated in the Resolution N. 332-2013 (COMIECO-LXVI) of December 2013 () and its Annex – Central American Technical Regulations RTCA 67.01.05:11 Alcoholic beverages, fermented. requirements for labeling.

The above is endorsed by the Costa Rican Decree N0. 38413-COMEX-MEIC-S stating the following: “The list of ingredients should be headed or preceded by an  appropriate title consisting of the term "ingredients" or included, if the drink has been mixed with other products, they must be declared. The list of ingredients must be in descending order. When additives other than processing aids are incorporated, they must be declared.”

Thus, since isinglass is used in the manufacturing process, it is not considered an additive or ingredient. Presently, beer in the market does not have labeling about isinglass. The following is a list of mandatory labelling required under Costa Rican regulations:

• Labels must be printed in Spanish in letters no smaller than 1 mm in height.
• Name of product
• Name and address of manufacturer, packer, or distributor
• Name and address of importer or distributor if imported
• Sanitary registry number
• Lot identification
• Date of expiration (beverages of 10% ABV or higher are exempt unless they contain milk products)
• Country of origin

Last update 16/06/2017

The development of data privacy regulation in Costa Rica is divided among two laws. The first law is Law No.7975, Undisclosed Information Law, which makes it a crime to disclose confidential/personal information without authorization. The second law is Law No. 8968 of July 2011, Protection in the Handling of the Personal Data of Individuals, which was enacted to regulate the activities of companies that administer databases containing personal information. The law names the Agency for the Protection of Individual’s Data PRODHAB, as the entity in charge of enforcing compliance with the regulation. The Constitutional Court also has jurisdiction to hear claims alleging violations of the Laws.

On March 2013 Costa Rica enacted regulations of its data protection law by Decree No. 37554 which dictates how personal information must be protected when managed by either public and private organizations; the requirement of written or electronic consent for management of sensitive information of an individual.

By August 2013 the Law No. 9162 was enacted assigning a single format to be used for medical records in digital format for all public and private organizations. The provisions of the law entitled the social healthcare system to apply the digital system in a period of five years. This law states that all clinical data of an individual should be treated under the privacy acts listed above.

In September 2016 the Regulation N° 39984-S for Use of Automated System for Prescription of Psychotropics was issued and is presently being updated, which makes e-prescription mandatory for this type of medication. The regulation for general prescription is not yet issued but coming soon.

Last update 16/06/2017

The following HS Code (harmonized system code) is used for determining tariffs and required documents for import: 8701 90 00 10- Agricultural tractors having the following characteristics:

1. Width of adjustable gauge
2. Hydraulic rear lift system, front with 2 or 3 points hook for the assembly of agricultural instruments and hydraulic system for the remote control
3. PTO rear, lateral, or front, to put into action different implements.
4. Draft bar for the trawl of agricultural implements and the system of hook for pulling implements

Tariffs
Based on the EU-Central America Association Agreement (AACUE), the current tariffs are the following cascade rates on customs value (CIF):

• Import duties (FDI): 0.0%
• Law 6946: 0.0%
• General sales tax (VAT): 0.0%

Within the framework of the AACUE agreement, in Chapter I, tractors are classified under tariff heading 8701.90.00.10 and are in Category A which do not have any duties applied. The category indicates that there is a total tariff reduction from the moment the Agreement is enforced (October 2013). The base rate on the negotiation of the agreement has been 0%. Likewise, the TICA System of Costa Rica also indicates that duties will remain with a rate of 0.0% (DAI) and 0.0% (Law 6946).

Documentary requirements
For the entrance of the merchandise, the importer will have to request:

• Technical Note 114: Title of ownership of the Tractor, granted by the registration of the property of the country of origin or accrediting its registration in the country of origin.
• Technical Note 353: PROTOCOLIZED JURY STATEMENT ARTICLE 5 TRANSIT ACT Noting that the vehicle being imported was not declared: Total Loss or has the conditions that typify article 5 of the Costa Rica Transit Law.
• Technical Note 362: Movement certificate, EUR.1. This document is obtained from the customs authority of the Member State or
• Technical Note 363: Invoice declaration of the exporter. It can be replaced by the previous if the invoice does not exceed the amount of 6000 euros.
• Tax Charge according to the class that is registered in the Ministry of Finance 
• Certificate of passage (SOLAS).
• MINAET Certification Energy Efficiency Fuel Consumption, Gas Emissions / Vehicle Power In addition to import documents (shipping documents, international cargo insurance, etc.).

Last update 27/03/2017