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December 15, 2009

Duty free zones reform passes

Legislative Assembly accepted Government's project

The Legislature passed last night, with the votes of 41 lawmakers, the reform of the Ley de Zonas Francas (http://www.comex.go.cr/fomento/zonasfrancas/Proyecto%20redacci%C3%B3n%20Final-preliminar17340.pdf). The project was discussed on file 17.340.

With the new Act, companies based in the greater metropolitan area will pay 6% of its profits by concept of income tax during the first 8 years of operation, and 15% in the next four years.

This law added an Article 21 ter. to the Ley de Regimen de Zonas Francas, which, in its subsection d) states:

"The companies located in the Gran Área Metropolitana Ampliada (GAMA) will pay a fee of six percent (6%) of their profits for purposes of the Ley del impuesto sobre la renta during the first eight years and of fifteen percent (15%) in the next four years. In the case of companies located outside the Gran Área Metropolitana Ampliada (GAMA), they will pay a fee of zero percent (0%) of their profits for purposes of the Ley del impuesto sobre la renta for the first six years, a five percent (5%) during the second six years and of fifteen percent (15%) during the next six years. "

Before this reform, the exemption was of one hundred percent (100%) up to a period of eight years and of fifty percent (50%) in the next four years, or of one hundred percent (100% ) for up to twelve years and of fifty percent (50%) in the next six years, depending if the areas were of "higher relative development" or "lower relative development ", without distinguishing whether or not the companies were located in the Gran Área Metropolitana Ampliada (GAMA).

In other words, the idea of establishing companies in duty free zones within the Gran Área Metropolitana Ampliada (GAMA) has become less attractive, while it will be very beneficial to establish them outside. The idea of this reform is to encourage the development of rural areas of Costa Rica.

Since the enactment of this Act, the State will have a term of four years to promote the establishment of industrial parks (Duty free zones) in the rural areas of the country.