G/SCM/N/284/CRI  
G/SCM/N/290/CRI  
21 July 2015  
(15-3738)  Page: 1/13  
Committee on Subsidies and Countervailing Measures  Original: Spanish  
 
  SUBSIDIES 
NEW AND FULL NOTIFICATION PURSUANT TO ARTICLE XVI:1 
OF THE GATT 1994 AND ARTICLE 25 OF THE AGREEMENT 
ON SUBSIDIES AND COUNTERVAILING MEASURES 
 
TRANSPARENCY NOTIFICATION ON THE EXTENSIONS UNDER SCM ARTICLE 27.4 OF THE 
TRANSITION PERIOD FOR THE ELIMINAT ION OF EXPORT SUBSIDIES PURSUANT 
TO THE PROCEDURES CONTAINED IN THE GENERAL COUNCIL 
DECISION IN DOCUMENT WT/L/691 
COSTA RICA 
The following communication, dated 1 July 2015, is being circulated at the request of the 
delegation of Costa Rica.  
_______________ 
  
Costa Rica hereby submits this new and full notification pursuant to Article XVI:1 of the GATT 1994 
and Article 25 of the Agreement on Subsidies and Countervailing Measures.  This notification on the extensions under Article 27.4 of the Agreement on Subsidies and 
Countervailing Measures granted pursuant to the procedures contained in the General Council 
Decision in document WT/L/691 is also being submitted for transparency purposes.  
In compliance with the standstill requirements, the programmes contained in this notification have 
not undergone any modification. G/SCM/N/284/CRI • G/SCM/N/290/CRI 
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  NOTIFICATION 
A. STANDSTILL  REQUIREMENTS  OF THE  PROCEDURES  FOR  EXTENSIONS  UNDER  
ARTICLE  27.4 
The programmes contained in this notification, which have been granted extensions under 
Article 27.4 of the Agreement on Subsidies and Countervailing Measures, have not been modified 
with respect to the requirements of document WT/L/691.  
B. THE
 DUTY-FREE  ZONE  REGIME 
1. Description of the subsidy 
The Duty-Free Zone Regime is the set of incentives and benefits offered by the State to 
enterprises making new investments in Costa Rica , subject to compliance with the requirements 
and obligations laid down in Law No. 7210 and amendments thereto, and its Implementing 
Regulations. One of the qualification criteria was the requirement that at least 75% of an enterprise's production be exported.
1 The Regulations establish the de finition of "new investments 
in the country". The establishment location of a group of enterprises operating as beneficiaries of 
this Regime is called a "duty-free zone", which is required to be a defined area, without a resident 
population, authorized by the Executive to operate in this capacity. 
2. Period of notification 
This notification provides a description of the Duty-Free Zone Regime corresponding to the 
calendar year 2014.  
3. Policy objective 
The primary objective of the Law is to foster th e socio-economic development of Costa Rica by 
attracting foreign investment, encouraging domestic investment and promoting exports. 
The Duty-Free Zone Regime is an important economic instrument for raising the standard of living 
of the population of Costa Rica, particularly by  creating sources of employment and supporting 
human development, with a special focus on less -developed areas of the country. This type of 
regime is conducive to the establishment of enterp rises engaged in a wide range of operations and 
production processes which contribute to the ge neration of wealth and technological know-how 
and increase the country's international competitiveness.  
4. Background and authority 
 Duty-Free Zone Regime Law No. 7210 of 23 November 1990 (full text attached as an Annex 
to Costa Rica's notification in document G/SCM/N/71/CRI of 5 March 2002) and 
amendments thereto.
2 
                                               
1 As indicated in paragraph 10(d) (Action plan for the elimination of export subsidies) of this section, 
this requirement was eliminated when amending the Du ty-Free Zone Regime Law, which came into force in 
January 2010 for new processing enterprises classified under the new category (f) in Article 17 of Law No. 7210. 
2 The amendments to Law No. 7210 of 23 November 1990 are contained in: Law No. 7467 
of 20 December 1994, Law No. 7535 of 1 August 1995, Law No. 7638 of 30 October 1996, Law No. 4924 of 17 September 1997 and Law No. 7830 of 22 September 1998 (full texts of this legislation are attached as Annexes to Costa Rica's notification in document G/SCM/N/71/CRI of 5 March 2002), Law No. 8262 of 2 May 2002 amending Article 23 of Law No. 7210 (the full text of this Article is attached as an Annex to Costa Rica's notification in document G/SCM/N/95/CRI of 8 July 2003) and Law No. 8794 of 12 January 2010, 
"Amendments to the Duty-Free Zone Regime Law No. 7210 of 23 November 1990 " (the full text of this 
amendment is attached as an Annex to Costa Rica's notification in document G/SCM/N/211/CRI of 12 July 2010). G/SCM/N/284/CRI • G/SCM/N/290/CRI 
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   Regulations implementing the Duty-Free Zone Regime Law - Executive Decree 
No. 29606-H-COMEX of 18 June 2001 (full text attached as an Annex to Costa Rica's notification in document G/SCM/N/71/CRI of 5 March 2002) and amendments thereto.
3 
 General Customs Law No. 7557 of 20 October 1995, Section I, Chapter V (Duty-Free Zone 
Regime4) and amendments thereto.5 
 Regulations implementing the General Customs Law, Chapter X (Duty-Free Zone Regime), 
Executive Decree No. 25270-H of 28 June 19966 and amendments thereto.7 
 
5. Form of the subsidy 
The subsidy is essentially an exemption from paymen t of all taxes, consular fees and duties and is 
provided in the manner set out below. 
 
                                               
3 The amendments to Executive Decree No. 29606-H-COMEX of 18 June 2001 are contained in: 
Executive Decree No. 29962 of 22 September 2001, Executive Decree No. 30124 of 25 January 2002, Executive Decree No. 30407 of 18 April 2002, Executive Decree No. 30849 of 23 October 2002 (all of which are attached as Annexes to Costa Rica's notification in document G/SCM/N/95/CRI of 8 July 2003), Executive Decree No. 31585-H-COMEX of 20 October 2003, Executive Decree No. 31715-H-COMEX-MEIC of 2 March 2004 (attached as an Annex to Costa Rica's notification in document G/SCM/N/114/CRI of 2 July 2004), Executive Decree No. 32232 of 16 December 2004 (attached as an Annex to Costa Rica's notification in document G/SCM/N/123/CRI), Executive Decree No. 31812-H-COMEX of 30 April 2004, Executive Decree No. 32804 of 30 November 2005 (attached as an Annex to Costa Rica's notification in document G/SCM/N/146/CRI), Executive Decree No. 33204 of 6 June 2006, Executive Decree No. 33283 of 7 July 2006, Executive Decree No. 33291 of 20 June 2006, Executive Decree No. 33360 of 20 September 2006, Executive Decree No. 33841-H-COMEX of 15 December 2006, Executive Decree No. 33483 of 2 November 2006 (attached as an Annex to Costa Rica's notification in document G/SCM/N/160/CRI) and Executive Decree No. 34166 of 4 December 2007 (attached as an Annex to Costa Rica's notification in document G/SCM/N/177/CRI/Rev.1). The Regulations implementing the Duty-Free Zone Regime Law, Executive Decree 
No. 34739-COMEX-H of 29 August 2008, repealed Executive Decree No. 29606-H-COMEX (attached as an Annex to Costa Rica's notification in document G/SCM/N/186/CRI-G/SCM/N/192/CRI). The latter did not amend or alter the benefits of the Duty-Free Zone Regime. The most recent amendments are contained in Executive Decree No. 36000-COMEX-H of 28 April 2010 " Amendments to the Regulations implementing the 
Duty-Free Zone Regime Law - Executive Decree No. 34739-H-COMEX of 29 August 2008 " (the full text of this 
amendment is attached as an Annex to Costa Rica's notification in document G/SCM/N/211/CRI of 12 July 2010) and Executive Decree No. 36725-COMEX-H of 26 July 2011 (the full text of this amendment is attached as an Annex to Costa Rica's notification in document G/SCM/N/243/CRI of 4 July 2012). 
4 The parts referred to are atta ched as Annexes to Costa Rica's notification in document 
G/SCM/N/71/CRI of 5 March 2002. The full text is available for consultation in the archives of the Rules Division. 
5 The amendments to the General Customs Law No. 7557 of 20 October 1995 are contained in Law 
No. 7900 of 3 August 1999 (available for consultation in  the archives of the Rules Division), Law No. 8373 
of 4 August 2003 and Law No. 8419 of 28 June 2004. 
6 The parts referred to are atta ched as Annexes to Costa Rica's notification in document 
G/SCM/N/71/CRI of 5 March 2002. The full text is available for consultation in the archives of the Rules Division. 
7 The amendments to the Regulations implementing the General Customs Law, Chapter X (Duty-Free 
Zone Regime), Executive Decree No. 25270-H of 28 June 1996, are contained in: Executive Decree No. 25295 of 17 June 1996 (available for consultation in the archives of the Rules Division), Executive Decree No. 26285 of 18 August 1997 (full text attached as an Annex to Co sta Rica's notification in document G/SCM/N/71/CRI of 
5 March 2002), Executive Decree No. 26961 of 30 March 1998 (available for consultation in the archives of the Rules Division), Decree No. 27717 of 23 February 1999 (availa ble for consultation in the archives of the Rules 
Division), Executive Decree No. 28242 of 30 September 1999 (available for consultation in the archives of the Rules Division), Executive Decree No. 28976 of 27 September 2000 (available for consultation in the archives of the Rules Division), Executive Decree No. 31667-H of 5 March 2004 (available for consultation in the archives of the Rules Division), Executive Decree No. 32098 of 23 September 2004 (available for consultation 
in the archives of the Rules Division), Executive Decree No. 33915 of 30 January 2007, and Executive Decree 
No. 35424 of 7 August 2009 (the full text of this amendment is attached as an Annex to Costa Rica's notification in document G/SCM/N/211/CRI of 12 July 2010). G/SCM/N/284/CRI • G/SCM/N/290/CRI 
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  The incentives granted by this Regime are: 
 
(a) inward clearance into the duty-free zone of raw materials, manufactured and 
semi-manufactured products, components and parts, packing materials and containers 
and any other goods required for the operations of the enterprise, without payment of 
any taxes or consular fees on their clearance8; 
(b) inward clearance into the duty-free zone of machinery, equipment, accessories and 
spare parts, without payment of any taxes or consular fees on their importation, and 
exemption from all import taxes and consular fees on the importation of motor vehicles required for operating, production, administrative and transport activities; 
(c) exemption from all taxes and consular fees on imports of fuel, oil and lubricants 
required for the operation of such enterp rises, provided that such goods are not 
produced within the country with the required quality, quantity and timeliness; 
(d) exemption from all taxes relating to the export or re-export of goods; 
(e) this exemption is granted for the re-expor t from the duty-free zones of production 
machinery and equipment which entered under the Law; 
(f) exemption from payment of taxes on capital and net assets, payment of land tax and 
of the tax on the transfer of real estate; 
(g) exemption from sales and consumption taxes on purchases of goods and services; 
(h) exemption from all taxes on remittances abroad; 
(i) exemption from all taxes on profits, and any other taxes for which the tax base is 
calculated in relation to gross or net earnings, dividends paid to shareholders, 
or revenue or sales; 
(j) exemption from all municipal or business taxes; 
(k) exemption from all taxes on imports or exports of commercial or industrial samples; 
(l) to enhance their business operations, enterprises benefiting under the Duty-Free Zone 
Regime are entitled to freely execute in foreign currency all kinds of deeds and 
contracts pertaining to their international transactions or transactions with other 
enterprises established under the Duty-Free Zone Regime; 
(m) enterprises based in relatively less-developed zones are entitled to a credit equivalent 
to 10% of the total amount of wages and salaries paid the previous year; this amount 
decreases by two percentage points per year and expires after five years; 
(n) export-processing enterprises which, havi ng operated for four years under the 
Duty-Free Zone Regime, reinvest in Costa Rica are entitled to an additional exemption 
from payment of income tax, at a percentage corresponding to the amount of the 
reinvestment as a proportion of the original investment. 
The above exemptions and concessions remain subject to fulfilment of certain specific 
requirements laid down by laws and regulations, and international agreements signed and 
approved by Costa Rica.  
                                               
8 Law No. 8794 of 12 January 2010, which amended the Duty-Free Zone Regime Law No. 7210 of 
23 November 1990, provides that packing, wrapping an d containers and computer equipment and electronic 
waste and other waste materials resultin g from activities by enterprises in  the duty-free zone are exempt from 
any import tax or subsequent duty if th ey are intended for recycling or reuse. G/SCM/N/284/CRI • G/SCM/N/290/CRI 
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  6. Beneficiaries and mechanism 
The following types of enterprise qualify for the Duty-Free Zone Regime: 
 
(a) export-processing industries which produce, process or assemble goods for export 
or re-export; 
 
(b) export-trading enterprises with no production activity, which simply handle, package 
or redistribute non-traditional goods and products for export or re-export; 
(c) service industries and enterprises which export services to natural or legal persons 
domiciled abroad, or which provide services to companies that are beneficiaries of the Duty-Free Zone Regime, in the latter case, provided that the services are directly 
related to the production processes of those companies; 
(d) enterprises which manage parks where enterprises are to be based under the 
Duty-Free Zone Regime, provided that th e parks meet the minimum infrastructure 
and service-availability requirements laid down in the Regulations implementing 
the Law; 
(e) enterprises or other entities engaged in scientific research with a view to raising 
the technological level of the country's industrial or agribusiness activity and 
foreign trade; 
(f) enterprises operating shipyards or dry or floating docks for shipbuilding, repair or 
maintenance.
9 
Banking, financial and insurance entities based in duty-free zones do not qualify for the benefits of 
this Regime. Neither do natural or legal persons en gaged in providing professional services qualify 
for Regime status.10 
 
There are several stages in the granting of Regime status:  
(a) any natural or legal person wishing to join the Duty-Free Zone Regime is required to 
submit the relevant application to the Corporation
11 (these rights and obligations are 
currently vested in the Foreign Trade Promotion Agency (PROCOMER), pursuant to Article 13(a) of Law No. 7638 of 30 October 1996), to be duly authenticated by a 
notary public, and to be accompanied by de tailed information on the pollution caused 
by the process and its waste and the docume nts requested by the Board of Directors 
of the Corporation. All applications must comply with the relevant instructions issued 
by the Corporation; 
(b) the Corporation examines the application and information included, subject to 
provision of all the required details, and forwards an opinion to the Board of Directors, 
which is then required to decide on the matter by no later than at the regular session 
following receipt of the opinion, or at a special meeting if so agreed by four of its members; 
                                               
9 Law No. 8794 of 12 January 2010 amended Law No. 7210 of 23 November 1990 on the Duty-Free 
Zone Regime and established a new category for proces sing industries which prod uce, process or assemble 
goods, irrespective of whether or not they export, prov ided that they meet the requirements laid down in 
Article 21 bis of the said Law, as set out in paragraph 10( d) (Action plan for the elimination of export 
subsidies) of this section. 
10 Law No. 8794 of 12 January 2010 amended Law No. 7210 of 23 November 1990 on the Duty-Free 
Zone Regime and also established that  enterprises that are engaged in the mining, exploration or extraction of 
hydrocarbons, in the production or sale of arms an d ammunition containing depleted uranium, in the 
production or sale of any type of arms or in the genera tion of electric power (unless the power is for their own 
consumption) are not eligible for the Duty-Free Zone Regime either. 
11 "Corporation" means " Corporación de la Zona Franca de Exportaciones S.A. " (Export Duty-Free Zones 
Corporation, public limited company), pursuant to the General Customs Law, Law No. 7557 of 20 October 1995. G/SCM/N/284/CRI • G/SCM/N/290/CRI 
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  (c) at its discretion, the Corporation may seek expert opinions from various State 
institutions to assist its examination of the enterprise's application; 
(d) if the recommendation is approved, it is th en ratified by the Ex ecutive by means of a 
resolution citing the details specified in the Regulations implementing the Law. 
7. Estimated amount of the subsidy 
As this subsidy involves exemptions from a number of different taxes and consular fees, which 
vary according to the level of compliance with  the specified requirements, the comprehensive 
information required to estimate the amount of the subsidy is not available. 
 8. Duration of the subsidy 
Regime benefits apply as of the date on which Du ty-Free Regime status is granted to the applicant 
enterprise. With regard to duration, the main ince ntives of the Duty-Free Zone Regime are subject 
to a specific expiry date. Moreover, where there is non-compliance with the conditions laid down, Regime status may be revoked by the Ministry of Foreign Trade. 
 
Of the incentives described in section B.5 of this notification, the following are subject to a specific expiry date: 
 
 exemption from taxes on capital and net assets and from payment of land tax for a period of 
ten years.
12 
 exemption from all taxes on profits and any other taxes for which the tax base is calculated 
in relation to gross or net earnings, dividend s paid to shareholders, or revenue or sales13, 
according to the following distinctions14: 
(a) for enterprises based in "relatively more developed zones", the exemption is 100% for 
a period of up to eight years, an d 50% for the following four years; 
(b) for enterprises based in "relatively less-developed zones", the exemption is 100% for 
a period of up to 12 years, and 50% for the following six years; 
(c) for export-processing enterprises which, ha ving operated for four years under the 
Regime, reinvest in Costa Rica, there ma y be a further exemption of 75% for up 
to four years, depending on the amount reinvested. 
 Exemption from all municipal and business taxes for a period of 10 years.15 
9. Trade effects of the subsidy16 
At present, 324 enterprises enjoy Duty-Free Zone status. Between them, those firms 
generated 51% of Costa Rica's total exports in 2014, as compared with 1991, when 81 enterprises 
covered by the Regime accounted for only 9.3% of total exports. In 2014, roughly 1,362 different 
products were exported to 114 countries under the Duty-Free Zone Regime.  
It should be noted that in 2014, sales abroad by  these enterprises amounted to US$5,792 million. 
At present the Duty-Free Zone Regime directly generates jobs for approximately 77,920 workers.  
                                               
12 See section B.5(e) of  this notification. 
13 See section B.5(h) of this notification. 
14 Law No. 8794 of 12 January 2010 amended Law No. 7210 of 23 November 1990 on the Duty-Free 
Zone Regime and modified these pa rameters, determining a differentia ted tax incentive for profits tax 
depending on whether or not the ente rprises benefiting are based within or outside the Expanded Greater 
Metropolitan Area (GAMA), as set out in paragraph 10(d) (Action plan for the elimination of export subsidies) of 
this section. 
15 See sections B.5(i) and (m) of this notification. 
16 Information supplied by the Foreign Trade Pr omotion Agency of Costa Rica (PROCOMER). G/SCM/N/284/CRI • G/SCM/N/290/CRI 
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  Costa Rica: Direct jobs created by the Duty-Free Zone Regime 
 2011 2012 2013 2014 
Duty-Free Zone Regime 64,909 72,115 75,231 77,920 
Source : PROCOMER. 
Along with this favourable socio-economic impact, the installation of high-technology enterprises 
has been conducive to technology transfer and the development of a significant knowledge-based 
industry in the domestic market, plus a specialized and highly competitive labour force. 
 
Costa Rica: Total Exports and Duty-Free Zone Exports 
in US$ million 
 2011 2012 2013 2014 
Duty-free zone 5,367.7 5,967.4 6,253.6 5,791.6 
Total exports 10,376 11,386.6  11,531.1 11,304.4 
Source: PROCOMER. 
10. Action plan for the elimination of export subsidies 
(a) Notification of beneficiaries 
Regime benefits are subject to the provisions of  Article 27.4 of the WTO Agreement on Subsidies 
and Countervailing Measures and the corresponding  extensions granted by the WTO in documents 
G/SCM/39 and WT/L/691. Every contract in which be nefits are granted therefore includes a clause 
that makes its duration subject to WTO rules. Accord ingly, the benefits as designed will have effect 
until 31 December 2015. In accordance with the commitments made in Decision WT/L/691, 
Costa Rica notified all the beneficiaries under the programme that no more export subsidies would be granted to processing enterprises after the end of calendar year 2015. 
 
(b) Internal procedures 
As part of the National Development Plan (drawn up in 2006), a new strategy for attracting 
investment has been designed consistent with WT O rules. In this respect, taking into account 
paragraph 1(e) of General Council Decision WT/L/691, an inter-institutional commission 
(Ministry of Finance - Ministry of Foreign Trade - PROCOMER) has been established to assess any measures that need to be taken to provide beneficiaries with legal certainty, fulfil the 
commitments undertaken and, at the same time, encourage higher levels of both domestic and 
foreign investment. In 2008 and 2009, this commission, in consultation with other authorities, began the process of drawing up proposed amendments to the Duty-Free Zone Law. 
 
(c) Legislative and regulatory changes 
As a result of the work carried out by the inter-institutional commission and taking into account 
the inputs received during the consultations with  other bodies and organizations, a draft law on 
"Amendments to the Duty-Free Zone Regime Law No. 7210 of 23 November 1990 " was prepared 
and put before the Legislative Assembly by the Executive on 21 April 2009. The draft was 
approved by the Legislative Assembly on 17 December 2009 and signed by the Executive 
on 12 January 2010. Accordingly, Law No. 8794 of 12 January 2010, entitled " Amendments to the 
Duty-Free Zone Regime Law, No. 7210 of 23 November 1990 " came into effect 
on 22 January 2010 when it was published in Official Journal La Gaceta  No. 15 of 22 January 2010. 
The full text of Law No. 8794 was included as an Annex to Costa Rica's notification in document 
G/SCM/N/211/CRI of 12 July 2010.  G/SCM/N/284/CRI • G/SCM/N/290/CRI 
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  After the necessary procedures for amending the Duty-Free Zone Regime Law had been 
completed, in the first few months of 2010 the inter-institutional commission started work on preparing the Regulations implementing the Law, and this work was completed towards the end of 
April, a few days before the new Government  of the Republic took office on 8 May. 
The Implementing Regulations of the Law were signed on 28 April 2010 and came into effect 
on 15 June 2010. The full text of the Regula tions (Decree No. 36000-COMEX-H of 28 April 2010) 
was included as an Annex to Costa Rica's notification in document G/SCM/N/211/CRI 
of 12 July 2010. 
 (d) Description of the amendments 
The amendments to the Duty-Free Zone Regime Law No. 7210 incorporate the following major 
changes: 
  Elimination of the link between incentives and export: 
In order to comply with the provisions of the WTO Agreement on Subsidies and Countervailing 
Measures, the amendments to the Law incorporate a new category of processing enterprise which is not required to export a percentage of production in order to be eligible for the Duty-Free Zone 
Regime. This new category appears in Article 17(f) of the current Law, which states "Processing 
industries which produce, process or assemble goods, irrespective of whether or not they export, provided that they meet the requirements laid down in Article 21 bis of this Law". 
 
Enterprises which seek admission to the Duty-Free Zone Regime under this new category 
described above must comply with the following requirements:  
- they must be in sectors that are strategic for the country's development or are 
established outside the Expanded Greater Metropolitan Area (GAMA); 
 
- they must make new investment in Costa Rica the nature and special features of 
which are such that it could be made in another country or be transferred to another country; and 
 
- on the date of submitting the applicatio n for Duty-Free Zone Regime status, they 
must be totally or partly exempt from, or not subject to, payment of income tax in Costa Rica. 
 
A Special Commission appointed by the Executive for this purpose will be responsible for defining 
strategic sectors.
17 When defining a strategic sector, this Special Commission shall take into 
consideration the National Development Plan, the existing criteria governing the sectors 
concerned, and the following guidelines: the projects are deemed to make a substantial 
contribution to social development and create quality jobs; the projects make an effective contribution to modernizing the country's production structure as a result of the high technology 
involved; the projects encompass research and de velopment activities; or the projects foster 
technological innovation and transfer or promote the incorporation of clean technology, integrated waste management, energy savings and efficient water management. 
 
The Special Commission, meeting in Special Session on 12 November 2010
18, agreed to define 
strategic sectors as follows: 
 Projects in relation to which the enterprise  operating under the Duty-Free Zone Regime 
employs on average at least 200 workers per year, duly recorded on the payroll, as from the date of commencement of productive operations, as provided for in the executive agreement granting regime status.  
                                               
17 Executive Decree No. 35999 of 28 April 2010, " Regulations of the Special Commission on the 
Definition of Strategic Sectors " (the full text is attached as an Annex to Costa Rica's notification in document 
G/SCM/N/220/CRI and G/SCM/N/226/CRI of 29 July 2011). 
18 Agreement of the Special Commission on the Defi nition of Strategic Sectors of 12 November 2010, 
published in Official Journal La Gaceta  No. 229 of 25 November 2010 (the full text is attached as an Annex to 
Costa Rica's notification in document G/SCM/N/220/CRI and G/SCM/N/226/CRI  of 29 July 2011). G/SCM/N/284/CRI • G/SCM/N/290/CRI 
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   Projects carried out by an enterprise operat ing under the Duty-Free Zone Regime in any 
of the following sectors:  
 advanced electronics; 
 advanced electronic components; 
 medical devices, equipment, implants and inputs and the highly specialized 
packing and packaging for such goods; 
 automobiles; 
 high-precision machined parts and components; 
 aerospace and aeronautics; 
 pharmaceutics and biotechnology; 
 renewable energy sources; 
 automation and flexible manufacturing systems; and 
 advanced materials. 
 
 Projects in the context of which the ente rprise operating under the Duty-Free Zone 
Regime assigns at least the equivalent of 0.5% of its sales to the research and development expenses of its local operations; and 
 Projects in which the enterprise operating under the Duty-Free Zone Regime has at least 
one of the following certifications for its local operations: 
 ISO (International Organization for Standardization) 14001 (14004) or equivalent; 
 LEED (Leadership in Energy and Environmental Design) or equivalent. 
 
 Encouragement for enterprises to set up in less-developed areas: 
Eligible zones outside the GAMA are less-developed areas of the country so the amendments 
include a series of incentives intended to encourage Duty-Free Zone Regime beneficiary 
enterprises to set up in these areas and to foster their economic and social development.  
These incentives include the following: 
 
- Lower investment requirements: To be eligible for the Duty-Free Zone Regime within 
the GAMA, an enterprise must make an initial investment in fixed assets amounting to 
US$150,000 if it wishes to set up in an industrial park and US$2,000,000 if it wishes 
to set up outside an industrial park. For enterprises wishing to set up outside the GAMA, the investment requirements are US$100,000 within an industrial park and 
US$500,000 outside. 
 
- Differentiated fiscal incentives: Enterprises situated within the GAMA will pay a rate 
of six percent (6%) of their profits for th e purposes of the Income Tax Law for the 
first eight years, and fifteen percent (15%) for the following four years. Enterprises 
outside the GAMA will pay zero percent (0%) of their profits for the purposes of the Income Tax Law during the first six years, five percent (5%) for the next six years, 
and fifteen percent (15%) for the following six years. 
 
- Megaprojects: Enterprises which invest a minimum of US$10,000,000 under an 
investment plan to be carried out over a period of eight years, calculated on the basis 
of the book value of the assets subjec t to depreciation, and which provide at 
least 100 permanent jobs throughout the period in which the enterprise operates, 
as duly shown on the payroll, will be exempt from all profits tax, and from any other 
tax for which the tax base is calculated in relation to gross or net profits, dividends paid to shareholders, or revenue or sales. This exemption will be 100% for eight years and 50% for a further four years provided that the enterprise sets up in a strategic 
sector within the GAMA, and 100% for 12 years and 50% for a further six years if the 
enterprise is situated in any sector outsid e the GAMA. Likewise, if the enterprise sets 
up outside the GAMA in a strategic sector and provides at least 100 permanent jobs, 
it is also eligible for this exemption for 12 years at a rate of 100% and for 
a further six years at 50%. 
 G/SCM/N/284/CRI • G/SCM/N/290/CRI 
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  - Encouraging poles of development: Th e amendments to the Law include a 
commitment by the State to draw up action  plans to create the necessary services, 
infrastructure and operating conditions to encourage the establishment of enterprises 
in duty-free zones and industrial parks, the modernization of those already existing in 
poles of development outside the GAMA. The Law specifically mentions five poles of 
development to which priority will be given: Limón, Puntarenas, Brunca Region, Guanacaste and Zona Norte. 
 
 Granting of tax credits for training: 
Beneficiary enterprises classified in the new category covered by Article 17(f) of the Law will have 
the right to a tax credit of 10% for reinvestment of profits, costs incurred within or outside the 
country for training Costa Rican personnel or personnel resident in Costa Rica working for the 
enterprise in the country, as well as for costs incurred within Costa Rica for training in micro, small- and medium-sized enterprises which supply enterprises covered by the Duty-Free 
Zone Regime. 
  Inclusion of criteria for strengthening links between duty-free zone enterprises 
and local industry (production chains): 
Enterprises supplying goods to enterprises establis hed in duty-free zones may, in turn, apply for 
Duty-Free Zone Regime status if a significant pr oportion of their total sales are to the said 
enterprises, "significant proportion" meaning at least forty percent (40%) of their total sales. 
 
Supplier enterprises meeting this requirement will not be required to belong to a sector that is strategic for the country's development or to be lo cated in an area outside the GAMA. They may be 
local enterprises engaged in activities in the count ry and do not therefore have to be exempt from, 
or not subject to, income tax.  
 Sales on the domestic market: 
The amendments to the Law specify that the exemptions and benefits applicable to enterprises 
classified under the new Article 17(f) of the Law shall not be contingent in fact or in law upon export performance. Such enterprises may therefore put their goods on sale in the domestic 
market, but in such cases all import taxes and cust oms procedures will apply. Tariffs will only be 
paid on the inputs used for production, in conformity with international commitments.  
C. THE
 INWARD  PROCESSING  REGIME 
1. Description of the subsidy 
The Inward Processing Regime is the customs regime allowing the entry of goods into national 
customs territory with the suspension of all type s of taxes, subject to lodgement of a guarantee 
deposit. The goods must be re-exported, within the time-limits laid down in the relevant regulations, after undergoing processing, repair, re construction, installation or assembly, or after 
being incorporated in sub-assemblies, machinery, transport equipment in general or appliances 
with a higher degree of technological or functional  complexity, or after being used for other similar 
purposes, under the conditions laid down in the regulations or provisions stipulated for this purpose by the competent administrative authority. 
 
Applications for a transition period for the Inward Processing Regime refer solely to exemptions from import duties and direct and indirect taxes that meet one of the conditions laid 
down in paragraphs (e), (g), (h) or (i) of Annex I to the Agreement on Subsidies and 
Countervailing Measures.  2. Period of notification 
This notification provides a description of the Inward Processing Regime corresponding to the 
calendar year 2014.  G/SCM/N/284/CRI • G/SCM/N/290/CRI 
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  3. Policy objective 
The Inward Processing Regime is designed to promote production, employment and foreign and 
domestic investment, which inevitably contributes to an increase in exports and domestic consumption. The conjunction of all these aspects helps to achieve national development 
objectives, such as raising the standard of living of the population, increasing income levels, 
reducing unemployment and increasing the country's productivity and ability to compete internationally. 
 
4. Background and authority 
 General Customs Law, Law No. 7557 of 20 October 1995, Chapter VI 
(Processing Regimes)
19 and amendments thereto.20 
 Regulations implementing the General Cust oms Law, Chapter XIII (Inward Processing 
Regime), Executive Decree No. 25270-H of 28 June 199621 and amendments thereto.22 
 Regulations on the Inward Processing and Drawback Regimes, Executive Decree 
No. 26285-H-COMEX of 19 August 1997 (the full text is attached as an Annex to 
Costa Rica's notification in document G/SCM/N/71/CRI of 5 March 2002), and amendments thereto.
23 
5. Form of the subsidy 
The Inward Processing Regime allows the entry of goods into national customs territory with the 
suspension of all types of taxes, subject to lodge ment of a guarantee deposit. The goods must be 
re-exported, within the time-limits laid down in the relevant regulations, after undergoing 
processing, repair, reconstruction, installation or assembly, or after being incorporated in 
sub-assemblies, machinery, transport equipment in general or appliances with a higher degree of technological or functional complexity, or after being used for other similar purposes, under the 
conditions laid down in the regulations or provisions stipulated for this purpose by the competent 
administrative authority.  
                                               
19 The parts referred to are atta ched as Annexes to Costa Rica's notification in document 
G/SCM/N/71/CRI of 5 March 2002. The full text is available for consultation in the archives of the Rules Division. 
20 See footnote 4. 
21 The parts referred to are atta ched as Annexes to Costa Rica's notification in document 
G/SCM/N/71/CRI of 5 March 2002. The full text is available for consultation in the archives of the Rules Division. 
22 See footnote 6. 
23 The amendments to the Regulations implementing the Inward Processing and Drawback Regimes, 
Executive Decree No. 26285-H-COMEX of 19 August 1997, are contained in: Executive Decree No. 27329 of 26 August 1998 and Executive Decree No. 29055 of 31 October 2000 (the full texts are attached as Annexes to Costa Rica's notification in document G/SCM/N/71/CRI of 5 March 2002); Executive Decree No. 29286 of 30 January 2001; Executive Decree No. 29607 of 18 June 2001; Executive Decree No. 30125 of 25 January 2002; Executive Decree No. 31848 of 25 May 2004; Executive Decree No. 32982-H-COMEX of 10 March 2006 (the full text of this amendment is attached as an Annex to Costa Rica's notification in document G/SCM/N/146/CRI); Executive Decree No. 34165 of 4 December 2007 (the full text of this amendment is attached as an Annex to Costa Rica's notification in document G/SCM/N/177/CRI/Rev.1); Executive Decree No. 34738-COMEX-H of 29 August 2008 (the full text of this amendment is attached as an Annex 
to Costa Rica's notification in document G/SCM/N/211/CRI of 12 July 2010), Executive Decree No. 35423-COMEX-H of 7 August 2009 (the full text of this amendment is attached as an Annex to Costa Rica's 
notification in document G/SCM/N/211/CRI of 12 July 2010), Executive Decree No. 36514 of 6 January 2011 (the full text of this amendment is attached as an Annex to Costa Rica's notification in document 
G/SCM/N/243/CRI of 4 July 2012) and Executive Decree No. 36726 of 26 July 2011 (the full text of this 
amendment is attached as an Annex to Costa Rica's notification in document G/SCM/N/243/CRI of 4 July 2012). G/SCM/N/284/CRI • G/SCM/N/290/CRI 
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  6. Beneficiaries and mechanism 
To be eligible for the Regime, the enterprise must choose one of the options available: 
 
(a) 100% re-export option: enterprises choosing this option may not sell their products 
on the domestic market; 
(b) re-export and domestic sale option: under this option enterprises may sell the goods 
on the domestic market or simply re-export them. 
Enterprises operating under the "domestic sale" option are required to pay the full tax payable on 
the definitive importation of the goods. Similarly, at the time of inward clearance of machinery and equipment under the Regime, they are required to pay the proportion of tax corresponding to the 
percentage of sales on the domestic market in relation to the total sales of the enterprise. 
 
Obligations for Regime beneficiaries include the following: to submit reports on all their operations to PROCOMER's Management Unit; to keep a log of operations carried out under the Regime; 
prior to commencing operations, to apply to the Directorate-General of Customs for permission to 
operate as a Customs Service Auxiliary; to keep goods entering under the Regime in authorized premises or plants; to keep a separate stock control system and accounting records for operations 
carried out under the Regime; to comply with customs legislation requirements, etc. 
 7. Estimated amount of the subsidy 
The information required to estimate the amount of the subsidy granted under this Regime 
is not available. 
 8. Duration of the subsidy 
Regime benefits apply as from the date of issue of the authorization to commence activities under 
the Inward Processing Regime. Except in the event of the revocation of the Regime by the Ministry 
of Foreign Trade or relinquishment of Regime st atus by the enterprise covered by the Regime, 
the benefits granted by this Regime continue for an indefinite term. 
 However, Regime benefits are likewise subjec t to the provisions of Article 27.4 of the 
WTO Agreement on Subsidies and Countervailing Measures and the corresponding extensions 
granted by the WTO in documents G/SCM/39 and WT/L/691. As indicated in section (a) of the 
Action plan for the elimination of export subsidies, all of the beneficiaries under the Inward Processing Regime have been notified that benefits under the Regime deemed to be export 
subsidies will remain in effect until 31 December 2015. 
 9. Trade effects of the subsidy
24 
At present, there are 64 active enterprises benefiting under the Inward Processing Regime. 
In 2014, this Regime provided employment for about 9,039 people. Some 126 different products were exported under this Regime to 52 countries in 2014.  
Costa Rica: Direct jobs created by  the Inward Processing Regime 
 2011 2012 2013 2014 
Inward processing 14,235 6,982 8,175 9,039 
Source: PROCOMER.  
The main destinations for exports under this Regime include the United States, Guatemala and 
Nicaragua, which account for 32%, 14% and 11%, respectively. 
 
                                               
24 See footnote 11. G/SCM/N/284/CRI • G/SCM/N/290/CRI 
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  It should be noted that a considerable proporti on of the firms operating under this Regime are 
located in areas with little urban development and accordingly represent a very significant source of employment for the area.  
Costa Rica: Total Exports and Inward Processing Exports 
in US$ million 
 2011 2012 2013 2014 
Inward processing 186.3 229.9 239.7 157.31 
Total exports 10,376  11,386.6 11,531.1 11,304.4 
Source: PROCOMER. 
 
10. Action plan for the elimination of export subsidies 
(a) Notification of beneficiaries 
In accordance with the commitments made in Decision WT/L/691, Costa Rica notified all the 
beneficiaries under the programme, by means of in d i v i d u a l  n o t i f i c a t i o n s ,  t h a t  n o  m o r e  e x p o r t  
subsidies would be granted after the end of calendar year 2015.  
(b) Internal procedures 
Pursuant to paragraph 1(e) of General Council Decision WT/L/691, 12 January 2010 saw the entry 
into force of Law No. 8794, Amendments to the Duty-Free Zone Regime Law No. 7210 . This law 
introduces the legal adjustments, notably the elimination of export subsidies, which were 
necessary in order to provide beneficiaries with legal certainty, fulfil the commitments undertaken, and encourage higher levels of both domestic and foreign investment.  
Once work on the Duty-Free Zone Regime amendments was completed, an inter-institutional 
commission, composed of representatives from the Ministry of Finance, the Ministry of Foreign 
Trade and the Foreign Trade Promotion Agency, assessed the Inward Processing Regime, identified 
the provisions that required changes and is currently focusing its efforts on the preparation and 
implementation of the corresponding amendments.  
(c) Legislative and regulatory changes 
On the basis of the changes deemed necessary to the Inward Processing Regime, 
the inter-institutional commission has prepared a draft amendment to the Regulations on the Inward Processing and Duty Refund Regimes (Executive Decree No. 26285-H-COMEX 
of 19 August 1997), the internal review of which is now being concluded to allow for its entry into 
force by the end of 2015.  
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