Costa Rica Info
Joined: 14 Nov 2006
Posts: 17
Home Country: costarica
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 Posted: Wed Nov 15, 2006 9:18 pm Post subject: DOING BUSINESS IN COSTA RICA / COSTA RICA BUSINESS GUIDE |
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DOING BUSINESS IN COSTA RICA
STARTING A BUSINESS
STANDARDIZED COMPANY
Legal Form: Sociedad Anónima (S.A.) - Corporation
Minimum Capital Requirement: 0
City: San José
Registration Requirements:
Procedure 1. Check the availability of the proposed company name and reserve the name in the Public Registry
Time to complete: 1 day
Cost to complete: USD 25 cost + USD 50 fee, included in incorporation costs
Procedure 2. A Notary Public drafts and notarizes a public deeds of the incorporation charter for registration before the Mercantile Section of the Public Registry.
Time to complete: 1 day
Cost to complete: 1.25% of the registered capital, included in incorporation costs
Comment: Total incorporation cost is about US$1,000 - 1,500, depending on the fees negotiated with the Notary Public that grants the incorporation charter deed.
Procedure 3. Send the notice of the constitution of the company for publication in Costa Rica's official newspaper "La Gaceta" and obtain a receipt
Time to complete: 1 day
Cost to complete: CRC 3170
Comment: A receipt evidencing that the notice was sent to La Gaceta, all publication expenses have been paid and that publication of the notice is pending, will suffice. The payment for the official newspaper publication changed from 3150 colones to 3170 colones.
Procedure 4. Deposit capital in the bank account
Time to complete: 1 day
Cost to complete: no charge
Comment: 25% of the capital stock indicated in the Incorporation Charter, if this is paid in cash, must be deposited in a national bank as a prerequisite for registering the company. The amount deposited may be withdrawn once the company has been duly recorded.
Procedure 5. Register the incorporation charter in the mercantile Section of the Public Registry
Time to complete: 25 days
Cost to complete: CRC 110,000, including issuance of corporate identity card
Comment: The registration process is performed by the Notary Public who granted the deed in his Protocol Book. It takes 3-4 weeks to get the approval. Once registered, the Registry issues to the company a corporate identification card number, known as the "Cédula de Persona Jurídica (federal tax number)", which serves as the tax identification number of the company. The company registry is implementing an electronic database. During the implementation of the new system, backlogs and slightly longer delays are possible.
Procedure 6. File Form D-140 with the before the Tax Department to register the firm as tax payer
Time to complete: 3 days
Procedure 7. Legalize the company's books
Time to complete: 18 days
Cost to complete: USD 35
Comment: A set of three accounting books ("Diario", "Mayor" e "Inventarios y Balances") and three corporate books (Shareholders' Record, Shareholders' Assemblies Minutes Books, and Board of Directors Meetings Minutes Books) must be filed before the Ministerio de Hacienda, Tax Department for their initial authorization by the Book Legalization Department. Once duly legalized, these books must evidence all internal affairs of the company (included but not limited to stock transfers) and are kept privately by the shareholders. Time: 2-4 weeks.
Procedure 8. Apply for the business license ("Patente Municipal") from the Municipality
Time to complete: 18 days
Cost to complete: USD 200
Procedure 9. Register the company as an employer with Caja Costarricense de Seguro Socia (CCSS, Social Security Institution)
Time to complete: 7 days
Cost to complete: no charge
Procedure 10. CCSS conducts an inspection at the company's facilities.
Time to complete: 1 day
Cost to complete: no charge
Procedure 11. Register for labour risk insurance with the National Insurance Institute (Instituo Nacional de Seguros)
Time to complete: 1 day
Cost to complete: no charge
Comment: The institution is the only insurance provider in Costa Rica and is state monopoly. The annual premium for this type of insurance amounts about 2.17% of the reported payroll.
OVERVIEW
Business and financing
Business forms: Stock corporation, partnership, limited partnership
The most common form of organisation for foreign investors is the stock corporation (sociedad anónima, or SA). Other forms, such as partnerships and limited partnerships, are available but infrequently used. The limited liability company (sociedad de responsibilidad limitada, or SRL) is subject to fewer controls than the SA and requires less financial disclosure, but the ownership limitations of the SRL are unpopular. Branches are rare.
Labour environment
Unemployment rate: 6.6% (2005) Minimum wage: By sector
About 15% of the labour force is organised under “solidarity associations”.
Costa Rica’s minimum salary is based on a cost-of-living index, which is adjusted by the National Salaries Council on a semi-annual basis. Monthly minimum wages for the private sector range from CRC 72,586 for domestic employees to CRC 285,635 for university graduates.
At least 90% of a company’s workforce must consist of nationals (variable by 10% in certain conditions) and no less than 85% of total payroll must be paid to nationals.
Taxation
Corporate tax
Main rate: 30% Branch profits tax: 15%
Companies engaged in business in Costa Rica are subject to tax at 30% only on Costa Rican-source income, regardless of their place of incorporation or management. Dividends received are not included in taxable income.
Individual tax
Progressive rates: up to 25%
Individuals, regardless of residence, are subject to income tax on Costa Rican-source income at progressive rates. Employment income is taxed by withholding tax at progressive rates to 15%.
Capital gains
Gains are taxed as income (limited scope)
Capital gains of companies and individuals are taxed as income, but the scope of gains subject to taxation is limited. Gains from the transfer of movable and immovable property are not taxed, unless such transactions are carried out on a habitual basis.
Indirect tax
Standard rate: 13% Other rates: 5%
The general sales tax applies to most transactions. Exempt items include food, educational supplies, books, medicine and inputs for the construction of dwellings. The 5% rate applies to the supply of electric power to dwelling houses. Registration is compulsory for businesses, but a simplified regime is available for small businesses.
Tax administration and compliance
Tax year: Corporations: corporate year; Individuals: year to September 30th
Taxpayers are required to file a self-assessment return within two months and 15 days of the end of the tax period. Companies must make three advance payments of tax during the year. Employment income is taxed by way of withholding. Individuals receiving non-employment income must file a return of this income.
Additional tax information
Withholding taxes: Dividends 15%, Interest 15%, Royalties 25%
Tax treaties: Costa Rica has concluded one tax treaty with Spain (not yet in effect) and an information exchange treaty with the US.
Dividends: Dividends are exempt for companies but subject to 5% or 15% withholding tax for individuals.
Revenue protection: There is no specific transfer-pricing or anti-tax-haven legislation.
Groups: There are no provisions for group taxation.
Incentives: Forestry; export promotion; industrial promotion; tourism.
Other taxes: Excise taxes, Equity tax Import duties, Annual tax on vehicles, Boats and planes tax, Property tax, Municipal business or franchise tax, Property transfer tax. |
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