Monday 28 November 2022

New tax exemptions would be the hook to attract high-tech and science companies

Initiative promotes facilities beyond free zones; Sectors see positive the intention to improve conditions for foreign investors

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26 November 2022 - At The Banks - BCCR

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QCOSTARICA – Strengthen the attraction of Costa Rica to attract high-tech, innovative, and science companies to invest, is an initiative that stands out in the development agenda that is discussed in Congress.

“Positioning innovation and development should be the main task of Costa Rica to attract innovative companies,” said Aida Montiel, legislator for Liberación Nacional

To achieve this, the plan establishes as a hook tax exemptions beyond the traditional free zone (zona France) and more agile procedures to those that wish to locate their business here.

The objective is to establish the necessary conditions to “encourage the attraction and promotion of foreign direct investment, promoted by entrepreneurs, scientific researchers, thematic experts and any agent of innovative change.”

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This idea is part of a bill that the Liberationist legislator, Aida Montiel, presented in the Legislative Assembly.

Of course, companies must meet some requirements in order to take advantage of the benefits.

Such is the case of a minimum initial investment of US$100,000, hiring more than 20 people and that each year increases by 10%, and a 20% growth of personnel from the fifth year onwards.

Furthermore, the salary of 50% of its personnel is at least three times greater than the minimum wage of an unqualified worker, which guarantees the minimum wage for non-qualified and that such training is being trained and subsidized.

“Positioning innovation and development should be the main task of Costa Rica for the attraction of innovative companies. What this bill seeks is that there is an inter-institutional and intersectoral link between the innovative industry, universities, the promoting agencies of innovation, and the government, for which a minimum investment capital is requested […] “, Montiel explained.

The proposed bill is rated as necessary by the Chamber of Information and Communication Technologies (CAMTIC).

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“It is a necessary project since many countries, especially in Latin America, are offering this type of incentive for foreign direct investment, even more aggressively; However, the initiative is self-limiting in its approach, since they are only benefits for foreign companies,” explained Adolfo Cruz, Vice President of Camtic and Proximity CEO.

Precisely Cruz leads a high-tech company that had to migrate part of its operations towards other more affordable Latin American countries, such as Colombia, Peru and Honduras, due to the high cost, especially tax, to produce in Costa Rica.

“As an entrepreneur, it hurts not to make that investment in Costa Rica, but it is practically impossible, before the disadvantage we have in front of multinationals,” he said.

The expert also asked to be cautious about the impact on employment that have projects of this nature, since training in STEM areas (science, technologies, engineers and mathematics) in Costa Rica is still half way, which makes it difficult to fill the jobs that the types of companies generate.

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Another challenge that Montiel’s proposal would face is access to infrastructure, as there is a delay in the country in the transition to 5G technology, much needed for the development of innovative projects.

Incentive

Innovation, high technology and science companies will be able to enjoy the following incentives and benefits:

  • Benefits established in the Ley de Zonas Francas (Law of Free Zones), in tax matters
  • Import of vehicles free of taxes, such as: Chassis with a cabin from one to two tons of load capacity, trucks or chassis for trucks, pick-up of one or two tons of cargo capacity and automobiles
  • Do not pay for five years, property taxes, real estate and furniture or municipal patents
  • Tax exemption on local purchases, goods or services necessary for the operation and administration of authorized activity to the company
  • Priority to streamline their permits in all government institutions

 

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