About the Economy
Overview of Business in Costa Rica
Costa Rica is trying to use its highly educated, computer literate, and disciplined workforce to attract high-tech corporations into the country. The goal is to decrease the traditional dependence on coffee, bananas, and cattle raising and become more focused on microprocessor production and high-tech telecommunications services. They have already lured companies such as Intel Corporation, Microsoft, GE, Acer, and Continental Airways, to make financial and physical investments within the country.
The World Bank announced that Costa Rica is both politically and economically stable. At its annual conference in El Salvador this year, the bank proclaimed that Costa Rica was "one of the most stable and robust" democracies in Latin America. World Bank continued by commending its "healthy economic growth rate" and "some of the best social indicators" on the continent.
Costa Rica actively supports continental free trade, and has already entered into agreements with Mexico and other countries in the region. The country has established free trade zones and has announced tax holiday opportunities to promote trade. They also offer exemption from import duties on raw materials, capital goods, and parts and components, while allowing tax exemptions on profits for eight years and 50 percent exemption for the following four years. Unrestricted profit repatriation is another possible benefit.
Costa Rica is expected to grow tremendously during the incoming years. This is a great competitive advantage for the many companies that have already chosen to operate in the country. All the companies involved with Costa Rica as it integrates itself into the modern world economy will find themselves ahead of the competition.
There are three main groups that promote business expansion going into and coming out of Costa Rica. First, CINDE, ( http://www.cinde.or.cr ) the Costa Rica Investment and Development Board, is the official promoter and advisor to foreign investors. It is a private, nonprofit organization that supplies complete and accurate information on the economy and business environment in Costa Rica. CINDE has an expert staff that will prepare customized visits to the country, assist in making initial contacts with suppliers and professionals, and do any required follow-up to establish the operation. All of these services are free.
The second is PROCOMER, ( http://www.procomer.com ) the Foreign Trade Promotion Institute, a public service institution that operates as a private company. Its mission is to promote the successful entry of export companies in international markets. It helps exporters understand relevant legislation, acquire export permits, seize the advantages of market opportunities. PROCOMER is the official contact point in consolidating the relationship between the exporters and importers.
Finally, CADEXCO, ( http://www.cadexco.or.cr ) the Costa Rican Exporters Chamber, promotes the Costa Rican business community abroad and helps its members become more competitive. It provides information to entrepreneurs and private and public institutions on the following topics: export procedures and requirements, trade barriers and how to overcome them, how to sell products abroad, export credit lines, export contracts, international prices, etc.
American Costa Rican Chamber of Commerce ( http://www.amcham.co.cr )
Starting a Business
Costa Rica, with its history of peaceful democracy and acceptance of foreign investment, is a relatively simple place to start a business. Anyone wishing to do so should seek the assistance of either CINDE or PROCOMER before beginning the process. They will provide the most accurate information and will help the newcomer through each step. The following will summarize the basic steps and the documents required to establish a business in Costa Rica.
The first step in establishing a business in Costa Rica is to formalize the business venture by choosing what type of company the business will be: a General Partnership, a Limited Partnership, a Limited Liability Company, or a Corporation. The most common form is the Corporation ( Sociedad Anónima ). Unlike other Latin American countries, it is not required to have a native Costa Rican as a partner, although it may be recommended. The company must select a name in Spanish and the name must be unique. Since formalization is a legal step, a qualified local commercial attorney should be contacted to ensure everything is accordance with the Costa Rica law. The attorney should also scour the registry to determine the uniqueness of the chosen name.
The next step is to have the Notary Public complete a public document requesting the issuance of a corporate identification number. The document is then presented before the Mercantile Registry, since all companies must be recorded in the registry to be a legal, authorized entity. At registration all information related to the new company and the persons who will mange the company must be submitted. An extract of the registration is then published in "La Gaceta" (the official legal journal). An initial equity payment, usually US$100 to US$1000, must be deposited with a local back of the Costa Rican national banking system until registration is completed.
Then, must register with the General Income Tax Office of the Ministry of the Treasury, the National Insurance Institute (INS), and Costa Rican Social Security Office (CCSS). Registration at the Income Tax Office is done to register as a taxpayer and to comply with other payment and tax obligations. At the INS, the company secures an occupational risk policy for its employees. By registering as an employer at CCSS, arrangements are made to collect the employer's social security contributions.
Finally, all lucrative activities require a Municipal License from the canton in which the activities are developed. The license involves paying a tax during the time of operations. The forms and requirements vary among the 81 municipalities.
In order to work, all foreigners must become residents in Costa Rica.
Costa Rican business executives understand the great potential growth from foreign investment. Personal contact with their business partners is very important in building a lasting, successful relationship. Appointments should be scheduled to meet in the host's office or in a hotel conference room. A business suit is the appropriate attire for most business meetings. Costa Ricans are relatively punctual compared to other Latin Americans, but even if they arrive late, they expect North Americans to be on time for appointments. Business projects can move along slowly since Costa Ricans are conservative and risk adverse. A firm handshake is the common greeting in Costa Rica.
Typical working hours are Monday through Friday, 8:00 AM to 12:00 PM and 2:00 PM to 6:00 PM. The Costa Rican government has a continuous working schedule from 8 AM to 4:00 PM. Most banks are open from 9:00 AM to 3:00 PM, but the may have different hours if located in a shopping mall.
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