Costa Rica: Investing
According to UNCTAD’s World Investment Report 2022, FDI inflows to Costa Rica increased by 82% in 2021, reaching to USD 3.2 billion, due to higher external demand following the COVID-19 pandemic and a high number of new investments in special economic zones. Moreover, the stock of FDI was estimated at USD 53.6 billion in 2021. Recently, investment in high-skilled sectors, such as high-tech medical equipment, has been considerable, making the industry Costa Rica's leading exporter. Other important sectors for FDI are manufacturing and infrastructure sectors, despite the departure of the American company Intel. Furthermore, Colombian and Chinese investments have been growing steadily. The tourism sector has also been increasing significantly. The main investing countries are the United States, Canada and Mexico. On the future side, Costa Rica's recent admission to the Organisation for Economic Co-operation and Development (OECD) and the approval of PPP regulations should strengthen FDI.
According to the Economist Business Environment, Costa Rica ranks 43 out of the 82 countries reviewed for their investment climate. Costa Rica is an outward-oriented country and continues to strengthen its relations with its different partners. Alongside its immediate neighbours and the United States, the country continues to foster trade links with China. In addition to exports, the country's development depends largely on its ability to attract foreign investment. The new sector of eco-tourism, in particular, has been attracting increasing amounts of investment, thanks to the Government's responsible environmental policy. And while Costa Rica has no major new laws or judicial decisions regarding FDI, authorities updated the regulations for Free Trade Zones, where most FDI is invested. There are four investment incentive programs in the country: the free trade zone system, an inward-processing regime, a duty drawback procedure, and the tourism development incentives regime. Costa Rica’s tax incentives, exemplary political and economic stability, a skilled labour force, and commercial promotion efforts, have made the country a leader in the region for international business. Additionally, the country's location in the heart of the American continent, as well as ports on the Pacific and Caribbean coasts make it an attractive destination for FDI. However, permanent government interference in controlling certain sectors of the economy, poor infrastructure, high energy costs, bureaucracy, corruption, weak investor protection and legal uncertainty due to the difficulty of enforcing contracts all represent impediments to greater competitiveness. On the other hand, the Investment Promotion Agency (CINDE) and the trade promotion agency (PROCOMER) are recognised as some of the most effective agencies in Latin America in terms of investment and trade promotion. According to the CINDE, Costa Rica saw numerous investment projects in recent years, including new multinational companies arriving in the country, in addition to the already established companies that reported growth in service, digital technology, life sciences and advanced and light manufacturing sectors. Among the new companies is Denmark's Coloplast, which has installed a medical device manufacturing plant (the first of its kind in the Americas). Additionally, the Belgium company Primoris invested USD 1 million to establish an advanced laboratory in Costa Rica for the chemical and physical analysis of food integrity.
| Costa Rica | Latin America & Caribbean | United States | Germany | |
|---|---|---|---|---|
| Index of Transaction Transparency* | 5.0 | 4.1 | 7.0 | 5.0 |
| Index of Manager’s Responsibility** | 5.0 | 5.2 | 9.0 | 5.0 |
| Index of Shareholders’ Power*** | 8.0 | 6.7 | 9.0 | 5.0 |
Source: Doing Business - Latest available data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.
| Foreign Direct Investment | 2020 | 2021 | 2022 |
|---|---|---|---|
| FDI Inward Flow (million USD) | 1,763 | 3,231 | 3,045 |
| FDI Stock (million USD) | 46,112.2 | 49,343.3 | 52,242.7 |
| Number of Greenfield Investments* | 105.0 | 144.0 | 156.0 |
| Value of Greenfield Investments (million USD) | 1,767 | 1,574 | 2,507 |
Source: UNCTAD - Latest available data
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
| Income tax for self-employed individuals | Progressive rates from 0% to 25% |
| Until CRC 3,742,000 | 0% |
| CRC 3,742,001 - 5,589,000 | 10% |
| CRC 5,589,000 - 9,322,000 | 15% |
| CRC 9,322,000 - 18,683,000 | 20% |
| Above CRC 18,683,000 | 25% |
| Income tax for employees (withhold by the employer) | Progressive rates from 0% to 15% |
| Until CRC 842,000 | 0% |
| CRC 842,001 - 1,236,000 | 10% |
| CRC 1,236,000 - 2,169,000 | 15% |
| CRC 2,169,000 - 4,337,000 | 20% |
| Above CRC 4,337,000 | 25% |
| Costa Rica | Latin America & Caribbean | United States | Germany | |
|---|---|---|---|---|
| Number of Payments of Taxes per Year | 10.0 | 28.2 | 10.6 | 9.0 |
| Time Taken For Administrative Formalities (Hours) | 151.0 | 327.5 | 175.0 | 218.0 |
| Total Share of Taxes (% of Profit) | 58.3 | 46.8 | 36.6 | 48.8 |
Source: Doing Business - Latest available data.
| Setting Up a Company | Costa Rica | Latin America & Caribbean |
|---|---|---|
| Procedures (number) | 10.00 | 8.00 |
| Time (days) | 23.00 | 25.22 |
Source: Doing Business.
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Latest Update: September 2023
