Although Costa Rica is not an offshore
financial center in the traditional sense its favorable tax regime means that it could have been classified as a tax haven
some decades ago. However it was not until fairly recently that the Government became aware of its tax haven potential and
began actively to both legislate for and market this sector of economic activity.
Costa Rica has many characteristics which give it
a distinct advantage over other offshore jurisdictions including (as with Hong Kong) a perceived onshore jurisdictional status,
very low taxes and a fiscal policy which does not discriminate
between residents and non-residents for tax purposes.
Offshore activity is now flourishing in Costa Rica
and a number of well known companies have set up operations there, but the industry is as yet only in its infancy.
A significant offshore banking industry does not
as yet exist principally because the industry was only released from the shackles of state control in 1996, and the distinction
between offshore and onshore is not considered relavent. The lively domestic banking industry is described below.
The insurance sector remains under state control
with significant political resistance being mounted against its privatization
The country's biggest low-tax sector is grouped around
the Free Zones and other export incentive programmes. These
cover a wide variety of industry and service sectors, but special mention is given to the electronics sector below.
Banking
The state banking monopoly ended in 1995 and in 2003
there were 19 banks in Costa Rica, of which 4 were public banks. Banking matters are governed by law No 1644 of 1953 as amended
by law No 7558 of 1995 (known as the Organic Law of the National Banking System).
Financial institutions in Costa Rica are regulated
by the Central Bank, through the General Superintendant of Financial Entities (SUGEF). The revised legislation reduced the
reserve liquidity requirements to 15% of the value of the balance sheet, prohibits loans to an individual customer which exceed
20% of a bank's capital and specifies that a bank's capital cannot be less than 9% of its loans.
Finance and credit companies that take deposits from
the general public require a license from the central bank and must have a minimum capital of 300 million colons.
Costa Rica has strict banking secrecy laws. The banks
do not share any banking information with the tax department or with any other Government departments other than the central
bank.
This general rule is qualified by an exchange of information agreement signed between the United States and Costa Rica.
A combination of strict secrecy laws, the country's
offshore status and legislative changes aimed at increasing competition and efficiency will probably result in major growth
in the banking sector in the near future.
Source: lowtax.net
