Costa Rica - Networked Learning

Offshore Opportunities

Some people say that Costa Rica is “The Switzerland of the Americas”. One reason for this is the statutory requirement of non-disclosure forced on all banking institutions. This means banking information on any client cannot be shared with and government agency, including the tax department (Global Money). Included in the statutory laws is secrecy of the principal. This allows confidentiality when setting-up a corporation, individual names is not necessary (ibid).

It is very easy to set-up operations in Costa Rica. It could take as short as two months and costs as little as $5000. If an offshore company meets certain criteria, like opening operations in a “Free Trade Zone”, there are very favorable tax agreements granted. Some benefits include exemption from import tariffs, withholding tax and even income tax.

(Free Trade Zone)

These opportunities are no longer a secret. In 1998 there were 219 offshore companies employing approximately 27,000 employees that generated exports of just under US$2 billion (Lowtax.Net-3). Companies like Intel, Procter & Gamble, Abbott Labs, Bristol Myers, Chiquita Brands, Esso, Texaco, 3M, UPS, DHL, Gillette, Warner Lambert, Xerox, Glaxo Smithkline, Johnson & Johnson, SC Johnson, Sherwin Williams, Sony Music, Pfizer, Kimberly Clark, Manpower, Microsoft, Dole Fresh Fruit, Colgate Palmolive, LL Bean, Alcatel, BASF, Lucent, KPMG, Price Waterhouse, Deloitte & Touche, 3 Com, Motorola, Oracle, Perkin Elmer, Western Union, Unisys and Cisco Systems have made huge investments in Costa Rica (Consultores Britanicos). It is estimated that these non-Costa Rican companies invested over US$600 million in Costa Rica just in the year 2000 (Consultores Britanicos). In the case of Intel, the main factors for them moving offshore to Costa Rica was: the government's liberalization of trade and investment, political stability, geographical proximity to the United States, and a highly educated workforce and good education system (Info Brief). Intel began manufacturing in Costa Rica in early 1998 (Intel). The Costa Rica operations have been involved with the production of Pentium 4 and Pentium Xeon (Intel). Additionally, there are assembly and test plants located here (Intel). Other recent major moves were in 2001 when Procter & Gamble moved its shared-services center for the Americas to Costa Rica as well as Western Union’s decision to establish its financial center there (International Reports). In 2001, Bridgestone Firestone invested over $40 million (International Reports).

(Intel’s site in Costa Rica)

There is more to offshore operations than favorable tax incentives and other ICT advantages. Some people may be concerned on the physical infrastructure. There are many passenger and cargo airlines in Costa Rica, including American Airlines, United Airlines, Continental Airlines, British Airways and Iberia (Atlas Offshore). The main airport is located about 15 minutes from the capital. There are several ocean freight companies that maintain regular service between Costa Rica and the US, Europe, Asia and Latin America (Atlas Offshore). There are more than 30,000 km of roads that could get you almost anywhere within the country; on the other hand, there are only a few railroad spurs that are privately owned (Wikipedia). The Communication and Electricity systems cover their needs (Atlas Offshore).

(Cisco Systems in Costa Rica)

Costa Rica is an active member of the international community and, in 1993, proclaimed its permanent neutrality (Wikipedia-2). With its record on the human rights, the environment and it’s peaceful settlement of disputes, if offers an excellent place politically to locate an offshore operation.