Costa Rica

Ease of Doing Business Rank: 74

Overview

 

Geographic location

The Republic of Costa Rica is a country in Central America.

Nicaragua lies to the north, the Pacific Ocean lies to the west, Panama to the southeast and the Caribbean Sea to the east.

Spoken language

The official language of Costa Rica is Spanish, spoken by 70% of the population. The country also has at least five living local indigenous languages.

Second or immigrant languages include English (10.7%), French (.7%) and German or Portuguese (.3%).

Population

The 2020 population estimate is 5.09 million.

According to census data, San José is the largest city (339,581), followed by Cartago (156,600) and Limón (55,667).

Popular industries

The top industries in Costa Rica are tourism, agriculture, microprocessors, food processing, medical equipment, textiles and clothing, construction materials, fertilizer and plastic products.

Education

The Times World University Rankings includes one university in Costa Rica in the top 1,000 in the world.

The Legatum Prosperity Index ranks Costa Rica’s educational system 55th out of 167 countries.

Popular entity types

The most common type of business entities in Costa Rica are the Corporation/Joint Stock Company and the Limited Liability Company.

The majority of businesses are in the form of a Limited Liability Company.

Costa Rica incentives for business

Costa Rica’s free zones offer many exemptions to qualifying companies. These may include no import duty, income tax, export tax, VAT, real estate transfer tax, withholding tax and consumption tax, in some instances.

Additionally, companies importing partially-manufactured materials for assembly into finished export products may benefit from duty-free imports of raw materials. Associated machinery may also qualify for duty-free exemptions.

Qualifying companies are also exempt from sales tax and excise tax on goods and services as well as municipal tax and licenses for ten years. Businesses operating within the Greater Metropolitan Area (GAM) which includes San José, Alajuela, Cartago and Heredia, enjoy eight years exemption and a 50% reduction for the following four.

Companies operating outside of this region enjoy up to a 12-year exemption and a 50% reduction for the following six.

History & Features

 

Main cities for business

San José is the capital and financial center of the country.

Popular historical & tourist attractions

Costa Rica has a tropical climate, sandy beaches, thick, dense jungles and a long history. With coastlines on both the Pacific and Caribbean, it’s a water-lover’s paradise.

The country also includes four UNESCO World Heritage Sites; three dedicated to the country’s outstanding natural beauty.

Cocos Island National Park is on an island off the coast of Costa Rica. It made the list due to its tropical rainforest, coral reefs and conservation efforts, especially for the endangered Scalloped Hammerhead Shark.

La Amistad National Park along the border between Panama and Costa Rica has one of the only remaining significant blocks of natural forest in Central America.

The Pre-Columbian chiefdom settlements in the Diquís Delta are the only UNESCO cultural site in the country. This collection of four archeological regions dates back to between 500 and 1500AD and includes artificial mounds, burial sites and a mysterious collection of large stone spheres.

Costa Rica also has plenty of activities, restaurants and nightlife. Many people visit Manuel Antonio for the beaches and fun, but there’s also hiking, guided tours, surfing and plenty of monkeys and capuchins.

The country also has an active volcano: Arenal. Visitors may see ash clouds, hear rumblings or spot lava flows, but it hasn’t erupted since 1968. The surrounding park is also home to about half of all Costa Rica’s wildlife.

Monteverde Cloud Forest Reserve and the Santa Elena Cloud Forest Reserve are ecotourist destinations. The unique microclimate sustains jaguars, pumas and monkeys. Visitors can partake in canopy tours for a bird’s eye view of the flora and fauna.

Costa Rica also offers small luxury inns and bed and breakfasts in Dominical due to its stunning, wide open beaches. Visitors can stake a claim on a secluded area backed by shade trees or saunter into town to buy local wares and sip a cool drink.

San José is the cultural hub of the country and home to the National Theater and the Pre-Columbian Gold Museum. The museum holds more than 2,000 gold objects weighing more than 20,000 troy ounces and is one of the largest collections of pre-Columbian gold in the Americas.

The Museo del Jade is equally compelling. It holds the world’s largest collection of American jade including pre-Columbian artifacts from 500 BC to 800AD.

History

The first recorded settlement in Costa Rica dates back 12,000 years.

The Spanish were the first Europeans to land in Costa Rica in 1502 when Columbus arrived on the Caribbean side of the island. He incorporated the territory into the Captaincy General of Guatemala as a province of New Spain in 1524, which also included Nicaragua, Honduras, El Salvador, and Guatemala, and the Mexican state of Chiapas.

Some suggest the name Costa Rica, or Rich Coast came from the fact that the Spanish noticed many indigenous peoples in the region wore gold. While many traveled to the region in search of gold, the country had little.

Some Spanish settled in the Central Valley as it had rich soil and a good climate suitable for farming. The indigenous population dwindled due to disease, slavery and violence. Since Costa Rica was so remote and lacked gold, it was mostly ignored by the Spanish government.

Following the Mexican War of Independence (1810–1821), Costa Rica became part of the independent Mexican Empire. Spanish settlers in Costa Rica became divided as the area was sparsely developed and impoverished. The Imperialists wanted Costa Rica to join Mexico and the Republicans wanted independence.

In 1823, violence erupted and the Republicans prevailed. Costa Rica became part of the Federal Republic of Central America which split from the Spanish Empire, proclaiming Central America independent. The republic eventually collapsed and Costa Rica became a sovereign country in 1838.

The Central Valley grew coffee for export and the country’s economy boomed. San José developed into a cultural center. The country further increased exports and remained peaceful until 1856, when an American ‘filibuster’ unsuccessfully tried to occupy the country. Costa Rica instituted a democratic government in 1869.

In 1948, civil war erupted after the Costa Rican Legislature annulled the results of presidential elections. In 1949, a rebel army overthrew the government and a new constitution was enacted. Costa Rica has not experienced any significant political violence since that time.

Today, Costa Rica operates under a democratic constitutional republic. They have a mixed economic system.

Other relevant facts

According to 2018 data, most Costa Ricans practice Catholicism (52%), followed by Protestantism (25%), Agnostic/Atheist/None (17%) other religions (3%) or did not respond (3%).

According to the 2011 census, most Costa Ricans identify as White/Castizo (66%), followed by Mestizo (14%), Immigrant (9%), Mulatto (7%), Amerindian (2.5%), Black (1%), Asian (.2%) and other (.9%).

Additional Information for Business

According to Forbes’ 2019 Best Countries for Business, Costa Rica is the 48th best country in the world for conducting business.

The 2019 Index of Economic Freedom rates Costa Rica 61st globally and states, “Although the regulatory regime has improved, deeper institutional reforms are needed. Excessive government bureaucracy still discourages dynamic entrepreneurial activity, slowing the pace of privatization and fiscal reform.”

World Bank’s “Doing Business” rankings rate Costa Rica 74th for ease of doing business in the world.

Costa Rica Entity Support Services by Blueback Global

Blueback Global provides a one-stop integrated solution to managing all aspects of your global operations. We can take the burden off you or your company’s internal resources by managing Entity Setup, Local Payroll, Accounting, Tax Reporting, HR Admin and Regulatory Compliance matters associated with operating in a foreign country. Our services are designed to be flexible and customized, so whether you are starting from entity registration, or have already registered but need support in setting payroll or hire employees, we can help at every point of the process.

The common scenarios that may give rise to the need for Blueback Global’s services include the following:

With our integrated approach, you can expect the following experience:

We have an initial complimentary meeting to discuss the scope, objectives and plans for your expansion plan into Costa Rica. After this meeting, you can expect a follow-up proposal from Blueback Global within 1 to 3 business days, that outlines that the approach, scope of work and expected deliverables and outcome. Thereafter, our implementation team will then work closely with your team to register the local entity, set up payroll, accounting process, employee social security and benefits. We will then develop a mutually agreed timeline and approach for ongoing payroll, accounting, tax reporting and HR support. Blueback Global will set up a compliance calendar so that you know exactly what and when compliance items such as tax reporting and payroll returns are due. We will of course facilitate all of these, so you do not have to keep track of the compliance dates.

Our goal is to make the process as smooth, simple and successful as possible, and remove the anxiety of operating in a foreign location, to deliver a great customer experience.

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