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31 January 2019

Costa Rica proposes bill to modify the Free Trade Zone Regime

On 20 December 2018, the Costa Rican Executive Power submitted to Congress Bill No. 21.200 (the bill), which would amend the current Free Trade Zone Regime (Law No. 7210) to comply with Action 5 of the Base Erosion and Profit Shifting (BEPS) project of the Organisation for Economic Co-operation and Development (OECD).

To establish the framework for the regime to comply with the OECD international standards without generating instability or uncertainty, the bill would:

  • Establish a Strategic Eligibility Index for Service Companies (IEES, for its Spanish acronym) with which service companies will have to comply in order to enter into the Free Trade Zone Regime under Section 17.c) of the Law
  • Amend Section 22 of the Law to eliminate the limit on the number of sales a service company, as defined in Section 17.c) of the Law, can have in the local market (currently at 50%)
  • Eliminate the requirement to file reports on the forecast of sales in the local market by companies under Section 17.c) of the Law

If approved, the bill would enter into force three months after enacted. The Ministry of Foreign Trade and the Ministry of Finance also would have to issue regulations implementing the Strategic Eligibility Index for Service Companies within that three-month period.

For additional information with respect to this Alert, please contact the following:

Ernst & Young, S.A., San José, Costa Rica
  • Rafael Sayagués | rafael.sayagues@cr.ey.com
  • Juan Carlos Chavarría | juan-carlos.chavarria@cr.ey.com
  • Antonio Ruiz | antonio.ruiz@cr.ey.com
  • Guillermo Leandro | guillermo.leandro@cr.ey.com
  • Paola Castro | paola.castro@cr.ey.com
  • Randall Oquendo | randall.oquendo@cr.ey.com
Ernst & Young, LLP, Latin American Business Center, New York
  • Ana Mingramm | ana.mingramm@ey.com
  • Enrique Perez Grovas | enrique.perezgrovas@ey.com
  • Pablo Wejcman | pablo.wejcman@ey.com
Ernst & Young LLP (United Kingdom), Latin American Business Center, London
  • Jose Padilla | jpadilla@uk.ey.com
Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific
  • Raul Moreno, Tokyo | raul.moreno@jp.ey.com
  • Luis Coronado, Singapore | luis.coronado@sg.ey.com

ATTACHMENT

Document ID: 2019-5153

 
 

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