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Free Trade Zones In Costa Rica

Written By: Fernando Solano

Guardia Montes & Asociados

San Jose, Costa Rica

Costa Rican Free Trade Zones (FTZ), known in Spanish as “zonas francas,” offer member companies a wide range of financial incentives and benefits. FTZs are open to export manufacturing companies, export trade companies (not producers), export service companies, organizations engaged in scientific research, or manufacturing firms with no export requirements.

The Free Zone Regime Law, Number 7210, governs the operations of all companies that operate within the Free Trade Zone Regime (FTZR). FTZR incentives are subject to limitations regarding length and type of benefits, which are not permanent, as their main purpose is to encourage new investment and not to give FTZ companies unlimited advantages over non-FTZ companies.

To qualify for FTZ benefits, a company must be categorized into one of the groups established by free trade zone law, which extend to the handling, processing, manufacture, production, repair and maintenance of goods, as well as services for exportation or re-exportation. Within the Central Valley Greater Metropolitan Area, a minimum $150,000 initial investment is required; outside of this area, $100,000 is the minimum required investment. The minimum required investment must be disbursed within three years of a company’s approval for FTZ benefits.

Companies under the FTZR enjoy many benefits, most related to tax incentives. All FTZ companies enjoy 100% exemption for import and export duties, excise taxes, and remittances repatriation tax. Other financial incentives are granted according to a company’s individual circumstances. For example, manufacturing companies that export more than 75% of their production are granted 100% exemption on corporate income tax for a period of 8 years, and 50% exemption during the following 4 years.

Other incentives for free trade zone companies include employee training assistance in conjunction with the Instituto Nacional de Apredizaje (National Learning Institute, or INA). Assistance is also offered regarding employee hiring, determining employee housing and educational needs, and advice regarding ongoing legal requirements for FTZ companies.

Main Requirements:

Manufacturing Firms Under Law 7210

Under Law 7120
Minimum export level 75%
Belong to a strategic sector Not required
Minimum employment level Not required
Minimum required investment $150,000 in fixed assets within FZ Park or $2,000,000 outside FZ Park

 Manufacturing Firms Under Law 8794

Main Requirements Small/Mid-scale Projects Large-scale Projects
Minimum export level Not required Not required
Belong to a strategic sector Yes Yes
Minimum employment level Not required Not required
Minimum required investment $150,000 in fixed assets withinFZ Park or $2,000,000 outsideFZ Park $10,000,000 investment in fixed assets (land is not included) to be completed in 8 years

Free Trade Zone Regime Main Incentives:

Income Tax Incentives Period of Time Law 7120 Law 8794: Small/Mid-scale Projects Law 8794: Large-scale Projects
Income Tax (Statutory income tax =30%) 4 years 15% 15% 15%
Income Tax (Statutory income tax 30%) 8 years 0% 6% 0%
Income Tax Credit No limit Not available  10% 10%
Income Tax Deferral No limit  Not available  Not available  Up to 10 years
Other Incentives  Period of Time  Law 7120  Law 8794: Small/Mid-scale Projects Law 8794: Largescale Projects
Import Duties No limit 100% exemption 100% exemption 100% exemption
Import and Excise Taxes No limit  100% exemption 100% exemption 100% exemption
Remittances Repatriation Tax No limit 100% exemption 100% exemption 100% exemption

The law firm, Guardia, Montes & Associates, based in San José, Costa Rica, has extensive experience providing high end and specialized services to its clients.

For more information about Guardia Montes & Asociados, please visit the International Society of Primerus Law Firms.


The general information contained herein is intended for informational purposes only. It is not intended to be, and should not be construed as, legal advice or legal opinion on any specific facts or circumstances.

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