Costa Rica: Investing
According to UNCTAD’s World Investment Report 2023, FDI inflows to Costa Rica declined by 5.8% in 2022, totaling USD 3 billion, still higher than the 2018-20 average. At the end of the same period, the stock of FDI was estimated at USD 52.2 billion, around 76.4% of the country’s GDP. Recently, 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. Furthermore, Colombian and Chinese investments have been growing steadily. The tourism sector has also been increasing significantly. 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. Data from the Costa Rican Foreign Trade Promotion Agency (PROCOMER) showed that FDI in 2023 reached a total of USD 3.921 billion, marking a 24% increase from 2022. Procomer disclosed that in 2023, 61% of the funds went to free trade zones, with 19% directed to the definitive regime. Additionally, 7% each were allocated to the real estate and tourism sectors, while 2% were split between the financial sector and active improvement initiatives.
Over the past two decades, Costa Rica has achieved notable success in fostering an ecosystem supportive of export-oriented technology firms, suppliers of goods and services, affiliated public institutions and universities, and a skilled workforce. The country actively pursues foreign direct investment (FDI), prioritizing the attraction and retention of high-quality investments. Investment promotion efforts are spearheaded by the Ministry of Foreign Trade (COMEX), with execution managed through PROCOMER. In its latest 2023-2026 strategy, Procomer delineated several sectors it aims to strengthen in terms of FDI, including advanced manufacturing, life sciences, and corporate services. Additionally, it identified "incipient sectors" such as agriculture, mariculture, logistics, and the film industry for development. Costa Rica upholds and encourages the rights of both foreign and domestic private entities to establish and own business enterprises and engage in most profitable activities. Exceptions exist in sectors reserved for the state or requiring a minimum participation of Costa Rican citizens or residents (such as electrical power generation, transport services, public accounting, and private security services). While state-owned entities dominate areas like medical services, telecommunications, finance, and insurance, private sector competition is not precluded. Notably, Costa Rica lacks an investment screening mechanism for inbound foreign investment. Several factors hinder FDI in the country. These include vulnerability to natural disasters, inadequate transport infrastructure, heavy economic reliance on the United States with a fully dollarized economy, and a large informal economy. Costa Rica ranks 74th among the 132 economies on the Global Innovation Index 2023 and 14th out of 184 countries on the latest Index of Economic Freedom.
| 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 | 2020 | 2021 | 2022 |
|---|---|---|---|
| FDI Inward Flow (million USD) | 1,763 | 3,231 | 3,045 |
| FDI Stock (million USD) | 46,112.2 | 49,343.3 | 52,242.7 |
| Number of Greenfield Investments* | 105.0 | 144.0 | 156.0 |
| Value of Greenfield Investments (million USD) | 1,767 | 1,574 | 2,507 |
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.
| 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% |
| 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.
| 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: May 2024
