flag Costa Rica Costa Rica: Investing

FDI in Figures

According to UNCTAD’s World Investment Report 2021, FDI inflows to Costa Rica fell by 38% to USD 1.7 billion in 2020, due to lower external demand and the collapse of tourism following the COVID-19 pandemic. The stock of FDI was estimated at USD 45.8 billion in 2020. The recession exacerbated fiscal imbalances and the government had to secure a multi-year USD 1.8 billion assistance from the IMF, an arrangement that caused civil unrest. In 2020, FDI in SEZs, which account for most inflows into the country, fell by 41% to about USD 1.1 billion. Tourism activities also attracted much lower foreign investment (-70% to USD 18 million), as did factories outside SEZs (-40% to USD 313 million). Recently, though, 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 increased in investment by three times. The main investing countries are the United States, Canada and Mexico. On the future side, Costa Rica's admission to the Organisation for Economic Co-operation and Development (OECD) and the approval of PPP regulations should strengthen FDI.

Costa Rica ranked 74th out of 190 economies on the World Bank's last Doing Business report, which was published in 2020, indicating a seven-spot decrease from the previous year. Costa Rica made getting electricity faster and improved the reliability of electricity supply by repairing the El Porvenir substation, installing new poles, and implementing a mapping program for transformers and meters throughout San José. The government also made enforcing contracts easier by adopting a new code of civil procedure that introduced pretrial conferences as part of the case management techniques in court. 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) is recognised as one of the most effective agencies in Latin America in terms of investment promotion. According to the agency, 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.


Country Comparison For the Protection of Investors

  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 201920202021
FDI Inward Flow (million USD) 2,8121,7633,196
FDI Stock (million USD) 44,077.146,112.253,691.7
Number of Greenfield Investments* 115.0103.0142.0
Value of Greenfield Investments (million USD) 1,2971,7731,834

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.


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Tax Rates

Sales Tax - Impuesto General sobre las Ventas (local name)
13% (standard rate).
Selective consumption tax: levied on goods that are considered non-essential with rates of up to 100%.

Several reduced VAT rates apply:
1%: goods that form part of the “basic consumption basket” (essential goods for all households)
2%: medicines, private education services and personal insurance premiums
4%: private health services and local flight tickets
Zero-rated items include: goods and services destined for exports, goods and services sold to a beneficiary of Free Trade Zone Regime (FTZR), books, services rendered for cultural radio stations, private education services when they are rendered by preschool, middle school, high school, college and any other education institution supervised by the Superior Education Counsel.
Exempt goods include: veterinarian services, including livestock; domestic monthly consumption of electricity not exceeding 280 kilowatts per hour; books, musical compositions and paintings created in Costa Rica; exported goods; re-importation of national goods within three years of their export; construction-related services (until 1 July 2021, 4% thereafter).
Company Tax
Withholding Taxes
Dividends: 5% (paid by stock corporations whose shares are registered on a local, officially recognized stock exchange)/15%, Interests: 0 (resident company)/15%, Royalties: 0 (residents)/25% (non-residents).
Social Security Contributions Paid By Employers
Other Domestic Resources
Finance Ministry of Costa Rica
Overview of Costa Rica's tax measures in response to Covid-19
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.

Individual Taxes

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%

Country Comparison For Corporate Taxation

  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.

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Investment Opportunities

Tenders, Projects and Public Procurement
Inter-American Development Bank, Tenders in South America
DgMarket, Tenders Worldwide
Setting Up a Company
Consult Doing Business Website, to know about procedures to start a Business in Costa Rica.
Useful Resources
Costa Rican Investment and Trade Development Board

Business Setup Procedures

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: February 2023