Modification of Law Eases Free-Zone Paperwork

July 27, 2007

A change to Costa Rica’s free-zone regimen will drastically cut the time companies spend waiting for approval to do business in the zones. It will now take eight days to be approved or rejected, whereas before it took more than a month, plus any time companies spent waiting for approval as an importer or exporter.

“It is definitely good news for those foreigners who want to locate their businesses here,” said Timothy Scott, the executive director of the Costa Rican Association of Free-Zone Businesses (AZOFRAS).

Specifically, the law now requires preliminary approval of an applicant to last only one day, while before it could take 10. Once the applicant is passed to the board of directors, it must be either rejected or passed to the Foreign Trade Minister’s desk within three days. The minister then has four days to make a decision.

In addition, applicants will no longer have to file separate paperwork to register as a company that imports or exports products or materials – the Foreign Trade Ministry will now handle that.

Scott noted that the change also requires free-zone companies to sign an agreement that that they will not manufacture weapons or parts in Costa Rica.

Under the free-zone regimen, companies that invest a certain amount of money and commit to exporting a certain amount of product can operate in Costa Rica for up to 12 years without paying income taxes.

Companies operating under the regime usually group together into the so-called free zones, which are private industrial parks that pool their investments and exports to meet the standards under the free-zone regimen.

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