WORLD TRADE  
ORGANIZATION  G/SCM/N/146/CRI 
4 July 2006 
 (06-3206) 
Committee on Subsidies and 
Countervailing Measures Original:   Spanish 
 
 
 
SUBSIDIES 
 
Extension Under SCM Article 27.4 of the Transition Period for the  
Elimination of Export Subsidies Pursuant to the Procedures  
in Document G/SCM/39  
 
Updating Notification  
 
COSTA RICA 
 
  The following communication, dated 30 June 2006,  is being circulated at the request of the 
delegation of Costa Rica.  
_______________ 
 
  In accordance with the procedures agreed at the Doha Ministerial Conference in document 
G/SCM/39 concerning the mechanism for the exte nsion of export subsidy programmes and, in 
particular, the provisions of paragr aph 1(d) and paragraphs  3 and 4 of that document, the Government 
of Costa Rica is submitting this updating notification concerning the programmes for which an 
extension has been granted (see documents G/SCM/61,  Add. 1 and 2;  G/SCM/62 and Add. 1 and 2). 
  In compliance with the standstill requirements, the programmes contained in this notification 
have not undergone any modification. G/SCM/N/146/CRI 
Page 2  
 
   
CONTENTS  
 
Page
 
 
Updating Notification .......................................................................................................... ................. 1 
 
ANNEXES  
 
Executive Decree No. 32804 of 30 November 2005 .......................................................................... 11 
Executive Decree No. 32982 of 10 March 2006................................................................................. 13  G/SCM/N/146/CRI 
 Page 3 
 
 
  A. STANDSTILL REQUIREMENTS OF THE PROCEDURES FOR EXTENSIONS UNDER ARTICLE 27.4 
 The programmes contained in this notificati on, which have been granted extensions under 
Article 27.4 of the Agreement on Subsidies and C ountervailing Measures, have not been modified 
with respect to the requirements of document  G/SCM/39. 
B. THE DUTY-FREE ZONE REGIME  
1. Description of the subsidy 
The Duty-Free Zone Regime is the set of in centives and benefits offered by the State to 
enterprises making new investments in Costa Rica, subject to compliance with the obligations set 
down in Law No. 7210 and amendments thereto, a nd its implementing regulations.  One of the 
qualification criteria is the requirement that at leas t 75 per cent of the enterprise's production must be 
exported.  The Regulations lay down the definition of "new investments in the country".  The 
establishment location of a group of enterprises operati ng as beneficiaries of this Regime is called a 
"Duty-Free Zone", which is required to be a defi ned area, without a resident population, which is 
authorised by the Executive to  operate in this capacity. 
2. Period of the notification 
This notification provides a description of the Duty-Free Zone Regime corresponding to 
calendar year 2005. 
 
3. Policy objective 
The fundamental objective of the Law is to promote the socio-economic development of 
Costa Rica by attracting foreign investment, domestic  investment and the promotion of exports.  The 
duty-free zone regime is an important economic inst rument 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 enterprises perfo rming a full range of operations and production 
processes which contribute to the generation of wealth and technological know-how, and increase the 
country's ability to be competitive internationally. 
 
4. Background and authority 
Duty-Free Zone Law, Law No. 7210 of 23 November  1990 (full text attached as an Annex to 
Costa Rica's notification G/SCM/N/71/CRI of 5 March 2002) and amendments thereto.
1 
 
Regulations Implementing the Duty-Free Zone Law – Executive Decree 
No. 29606-H-COMEX of 18 June 2001 (full text attach ed as an Annex to Costa Rica's notification 
G/SCM/N/71/CRI of 5 March 2002) and amendments thereto.2 
                                                      
1 The amendments to Law 7210 of 23 November 1990 are contained in Law 7467 of 
20 December 1994, Law 7535 of 1 Au gust 1995, Law No. 7 638 of 30 October 1996, Law No. 4924 of 
17 September 1997 and Law No. 7830 of 22 September 1998 (full texts of this legislation attached as Annexes 
to Costa Rica's notification G/SCM/N/71/CRI of 5 March 2002).  Law No. 8262 of 2 May 2002 amended 
Article 23 of Law 7210;  the full text of this Article  is attached as an Annex to Costa Rica's notification 
G/SCM/N/95/CRI of 8 July 2003. 
2 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, and Executive Decree No. 30849 of 23 October 2002, (all of 
which are attached as Annexes to Costa Rica's notif ication G/SCM/N/95/CRI of 8 July 2003), Executive G/SCM/N/146/CRI 
Page 4  
 
   
General Customs Law, Law No. 7557 of 20 Oct ober 1995, Section I, Chapter V (Duty-Free 
Zone Regime
3) and amendments thereto.4 
 
Regulations Implementing the General Customs Law, Chapter X (Duty-Free Zone Regime), 
Executive Decree No. 25270-H of 28 June 19965 and amendments thereto.6 
 
5. Form of subsidy 
 The subsidy is essentially an exemption from paym ent of all taxes, consular fees and duties.  
The subsidy is provided in the manner set out below.  
 
The incentives granted by this regime are: 
  (a) Exemption from all tax and consular fe es on imports of raw materials, manufactured 
and semi-manufactured products, component s and parts, packing and packaging 
materials, and other goods and mercha ndise required for the operation of the 
enterprise; 
  (b) exemption from all tax and consular fees on imports of machinery, equipment, 
accessories and spare parts, and on automotive vehicles required for the operation, production, administration and transport activities of the enterprise; 
 
 (c) exemption from all tax and consular fees on imports of fuel, oil and lubricants 
required for the operation of such enterprises; 
 
                                                                                                                                                                    
 
Decree No. 31715-H-COMEX-MEIC of 2 March 2004 (a ttached as an Annex to Costa Rica's notification 
G/SCM/N/114/CRI of 2 July  2004), Executive De cree No. 32232 of 16 December 2004 (attached as an Annex 
to Costa Rica's notification G/SCM/N/123/CRI) and Executive Decree No. 32804 of 30 November 2006 
(attached as an annex to this notification). 
3 Parts referred to attached as an Annex to  Costa Rica's notificati on G/SCM/N/71/CRI of 
5 March 2002.  The full text is available for examination in the archives of the Legislative Division. 
4 The amendments to the General Customs Law, Law No. 7557 of 20 October 1995, are contained in 
Law 7900 of 3 August 1999 (available for examination in the archives of the Legislative Division), Law 
No. 8373 of 4 August 2003 and Law No.8419 of 28 June 2004 (this last reform neither amended nor changed 
any benefits under the regimes.  It is attached hereto as an Annex for the sake of transparency). 
5 Parts referred to attached as an Annex to  Costa Rica's notificati on G/SCM/N/71/CRI of 
5 March 2002.  The full text is available for examination in the archives of the Legi slative Division.  Executive 
Decree No.31667-H of 5 March 2004 (available for examinati on in the archives of the Legislative Division) and 
Executive Decree No. 32089 of 23 September 2004 (this last reform neither amended nor changed any benefits 
under the regimes.  It is attached hereto as an Annex for the sake of transparency). 
6 The amendments to the Regulations Implementing the General Customs Law, Chapter X (Duty-Free 
Zone Regime), Executive Decree 25270-H of 28 June 1996, are contained in Executive Decree No. 25295 of 
17 June 1996 (available for examination in the archiv es of the Legislative Division), Executive Decree 
No. 26285 of 18 August 1997 (full text attached as an Annex to Costa Rica's notification G/SCM/N/71/CRI of 5 March 2002), Executive Decree No. 26961 of 30 March 1998  (available for examination in the archives of the 
Legislative Division), Decree No. 27717 of 23 February 1999 (available for examination in the archives of the 
Legislative Division), Executive Decree No. 28242 of 30 September 1999 (available for examination in the archives of the Legislative Divisi on), Executive Decree No. 28976 of 27 September 2000 (available for 
examination in the archives of the Legislative Divi sion).  Executive Decree No.31667-H of 5 March 2004 
(available for examination in the ar chives of the Legislative Division)  and Executive Decree No. 32089 of 
23 September 2004 (this last reform neither amended nor changed any benefits under the regimes.  It is attached 
hereto as an Annex for the sake of transparency).  G/SCM/N/146/CRI 
 Page 5 
 
 
   (d) exemption from all tax relating to th e export or re-export of products.  This 
exemption is granted for the re-export from the Zones of production machinery and equipment which entered pursuant to the law; 
  (e) exemption from payment of tax on capita l and net assets, and payment of land tax; 
 
 (f) exemption from sales and consumption tax on purchases of goods and services;   (g) exemption from all taxes on remittances abroad;  
 (h) exemption from all taxes on profits, and any other taxes for which the tax base is 
determined according to gross or net earni ngs, dividends paid to shareholders, or 
revenue or sales; 
  (i) exemption from any municipal tax or business tax; 
 
 (j) exemption from any taxes on imports or e xports of commercial or industrial samples; 
  (k) to enhance their business operations, en terprises covered by the Duty-Free Zone 
Regime may freely execute all kinds of deed s and contracts in foreign currency with 
respect to international transactions or tr ansactions with other enterprises established 
under the Duty-Free Zone Regime; 
  (l) enterprises based in relatively less-deve loped areas are entitled to a credit of 10 per 
cent of the amount paid as wages and salaries during the previous year, with that percentage decreasing by two percentage poi nts per annum, through to its termination 
in the fifth year; 
  (m) export processing enterprises operating as beneficiaries of the Duty-Free Zone 
Regime which, on completion of four years of operation under that Regime, reinvest 
in the country may be granted an additiona l exemption from payment of income tax, 
for a percentage corresponding to the ratio  of the reinvestment to the original 
investment. 
  The above exemptions remain subject to fulfilm ent of certain specific requirements laid down 
by Laws and Regulations, and international ag reements signed and a pproved by the country. 
 6. Beneficiaries and mechanism 
The following types of enterprise qua lify for the Duty-Free Zone Regime: 
  (a) Export processing industries which produ ce, process or assemble for export or re-
export; 
 
 (b) export trading enterprises, with no prod uction activity, which merely handle, re-pack 
or re-distribute non-traditional merchand ise and products for export or re-export; 
  (c) service industries and enterprises which export services to natural or legal persons 
domiciled abroad, or provide the services to companies which are beneficiaries of 
Duty-Free Zone Regime, in the latter case provided that the services are directly 
related to the production process of the co mpanies which are beneficiaries of the 
Duty-Free Zone Regime; 
 G/SCM/N/146/CRI 
Page 6  
 
   (d) enterprises managing industrial parks wh ere enterprises are to be based under the 
Duty-Free Zone Regime, provided that the parks meet certain minimum conditions regarding infrastructure and availability of services, in according with the Regulations 
implementing the Law; 
 
 (e) enterprises or entities engaged in scientific research to raise the technological level of 
the country's industrial or agribusiness activity and foreign trade; 
  (f) enterprises operating shipyards or dry or fl oating docks for the construction, repair or 
maintenance of ships. 
 
 Export trading enterprises do not qualify for the exemptions under indents (g) and (h) of 
section A.5 of this notification.  In this context it sh ould be noted that the great majority of enterprises 
operating under the Duty-Free Zone Regime are export processing industries rather than export 
trading enterprises. 
 
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 engaged in  providing professional 
services qualify for the Regime.  
There are several stages in the granting of Regime status: 
 
 (a) The natural or legal person wishing to jo in the Duty-Free Zone Regime is required to 
submit the relevant application to the Corporation
7 (rights and obligations currently 
vested in the Foreign Trade Promo tion entity (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 detailed information on the pollution caused 
by the process and its waste and the documents requested by the Board of Directors of the Corporation. Generally speaking, 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 ordinary meeting following receipt of the opini on, or at an extraordinary meeting if so 
agreed by four of its members. 
 
 (c) At its discretion, the Corporation may seek specialist opinions from various State 
institutions to assist its examination of the enterprise's application. 
  (d) If the recommendation is approved, it is  then ratified by the Executive, by a 
resolution citing the details specified in  the Regulations implementing the Law. 
 7. Estimated amount of the subsidy 
 Since this subsidy involves exemptions from a number of different taxes and consular fees, 
which vary according to the level of compliance wi th the specified requirements, the comprehensive 
information required to estimate the amount of the subsidy is not available. 
 
                                                     
 
7 "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/146/CRI 
 Page 7 
 
 
  8. Duration of the subsidy 
 The Regime benefits apply as from the point in time when Duty-Free Regime status is granted 
to the enterprises applying for that status.  Except in the case of cancellation of Regime status by the 
Ministry of Foreign Trade, relinquishment by the beneficiary enterprise and specific exceptions for any of the incentives as set out below, Duty-Free Zo ne status is held for an indefinite term. 
 
 Of the incentives described in No. 5 of this no tification, the following are subject to a specific 
expiry date:  - Exemption from taxes on capital and net assets, a nd payment of land tax, for a period of ten 
years.
8 
 
- exemption from all taxes on profits and any othe r tax for which the tax base is determined 
according to gross or net earnings, dividends paid to shareholders or revenue or sales9, 
according to the following distinctions: 
 
(a) For enterprises based in "relatively more developed areas", the exemption is 100 per 
cent for a period of up to eight years, and 50 per cent for the following four years. 
(b) For enterprises based in "relatively less deve loped areas", the exemption is 100 per cent 
for a period of up to 12 years, and 50 per cent for the following six years. 
(c) For export processing enterprises which, after operating for four years under the 
Regime, make investments in Costa Rica, there is a possibility of a further exemption 
of 75 per cent for up to four years, depending on the reinvestment amount. 
- Exemption from all municipal tax and business tax for a period of ten years.10 
 9. Trade effects of the subsidy
11 
 At the present time there are 135 enterprises receivi ng the benefits of Duty-Free Zone status.  
Between them, those firms generate d 53 per cent of the total exports of Costa Rica in 2005, as 
compared with 1991, when 81 enterprises covere d by the regime accounted for only 9.3 per cent of 
total exports.  In 2005, roughly 1049 different pr oducts were exported to  101 countries under the 
Duty-Free Zone Regime.  
 In the last five years, the growth in exports of companies covered by the Duty-Free Zone 
Regime has been around 6 per cent a year.  It should be noted that in 2005, the sales abroad of these 
enterprises amounted to almost US$3.7 million, 14 per cen t more than the previous year.  On average, 
some 36,508 workers are directly employed by the Duty-Free Zone Regime.  
 Along with this favourable socio-economic impact, the establishment of high-technology 
enterprises has been conducive to technology tran sfer and the development of a significant 
knowledge-based industry in the domestic market, pl us a specialized and highly competitive labour 
force. 
                                                     
 
8 See section 5(e) of this notification. 
9 See section 5(h) of this notification. 
10 See section 5(i) and (m) of this notification. 
11 Information supplied by the Foreign Trade Promotion Agency (PROCOMER).  The data for 2005 
are preliminary figures:  the last few months may undergo adjustments (some formalities being provisional) that 
are not entered in the data base until the final documentation has been processed. G/SCM/N/146/CRI 
Page 8  
 
   
Costa Rica:  Total Exports and Duty-Free Zone Exports 
In Million US$ 
 
 2003 2004 2005 
Duty-Free Zone 3,326.3 3,241.7 3,698.3 
Total exports 6,121.9 6,281.3 7,000.6 
Source :  PROCOMER 
 
C. THE INWARD PROCESSING REGIME  
1. Description of the subsidy 
 The inward processing regime is the Customs regime allowing the entry of merchandise into 
the national Customs territory with suspension of all kinds of taxes, subject to lodgement of a 
guarantee deposit.  The goods must be re-exported, within time-limits laid  down in the relevant 
regulations, after undergoing processing,  repair, reconstruction, installation, assembly, or after being 
incorporated in sub-assemblies, machinery, transpor t equipment in general or appliances with a higher 
degree of technological or functional complexity, or  after being used for other similar purposes, in 
situations as laid down in regulations or provisi ons stipulated for this purpose by the competent 
administrative authority. 
 
 Applications for a transition period for th e Inward Processing Regime refer solely to 
exemptions from import duties and indirect taxe s meeting one of the conditions laid down in 
paragraphs (g), (h) or (i) of Annex I to the SCM Agreement. 
 2. Period of notification 
 This notification provides a description of the Inward Processing Regime corresponding to 
calendar year 2005.  
3. Policy objective 
 The inward processing regime is designed to  promote production, employment, and foreign 
and domestic investment, which inevitably cont ributes towards increasing exports and domestic 
consumption.  The conjunction of all these aspect s helps to achieve national development objectives 
such as raising the standard of living of th e population, increasing in come 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)
12 and amendments thereto.13 
  Regulations Implementing the General Customs Law, Chapter XIII (Inward Processing Regime), Executive Decree No. 25270-H of 28 June 1996
14, and amendments thereto.15 
                                                      
12 Parts referred to attached as an Annex to  Costa Rica's notificati on G/SCM/N/71/CRI of 
5 March 2002.  The full text is available for examination in the archives of the Legislative Division. 
13 Cf. footnote 4. 
14 Parts referred to attached as an Annex to  Costa Rica's notificati on G/SCM/N/71/CRI of 
5 March 2002.  The full text is available for examination in the archives of the Legislative Division. 
15 Cf. footnote 6.  G/SCM/N/146/CRI 
 Page 9 
 
 
   
 Regulations on the Inward Processing a nd Duty Refund Regimes, Executive Decree 
No. 26285-H-COMEX of 19 August 1997 (full text att ached as an Annex to Costa Rica's notification 
G/SCM/N/71/CRI of 5 March 2002), and amendments thereto.16 
 5. Form of subsidy 
 The inward processing subsidy allows the en try of merchandise into the national Customs 
territory with suspension of all kinds of taxes, s ubject to lodgement of a guarantee deposit.  The goods 
must be re-exported, within time-limits laid dow n in the relevant regul ations, after undergoing 
processing, repair, reconstruction, installation, 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 bei ng used for other similar purposes, in situations as 
laid down in regulations or provisions stipulated for this purpose by the competent administrative authority.  6. Beneficiaries and mechanism 
 To qualify for the Regime, the enterprise mu st choose one of the options available: 
  (a) 100 per cent re-export option: enterpri ses choosing this option may not sell their 
products on the domestic market; 
 
 (b) re-export and domestic sale option: unde r 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 
for the definitive importation of the goods.  Simila rly, on the entry of the machinery and equipment 
under the regime, they are required to pay the prop ortion of tax corresponding to the percentage of 
sales on the domestic market as a ratio of  the total sales of the enterprise. 
  The obligations for regime beneficiaries incl ude the following: to submit reports on all their 
operations to the Management of PROCOMER;  to  keep a log of operations carried out under the 
regime;  prior to commencing operations, to appl y to the Directorate-General of Customs for 
permission to operate as a Customs Agent;  to keep goods entering under the regime in authorized 
premises or plants; to keep a separate inventory control system and accounting records for operations 
carried out under the regime; to comply w ith 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 
 The 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 
                                                     
 
16 The amendments to the Regulations Implementing the Inward Processing and Duty Refund Regimes, 
Executive Decree No. 26285-H-COMEX of 19 August 19 97, are contained in Ex ecutive Decree 27329 of 
26 August 1998 and Executive Decree 29055 of 31 October 2000 (full texts attached as an Annex to Costa Rica's notification G/SCM/N/71/CRI of 5 March 20 02).  Also, Executive D ecree 32982-H-COMEX of 
10 March 2006 (attached as an Annex to this notification). G/SCM/N/146/CRI 
Page 10  
 
  by the Ministry of Foreign Trade, or relinquishme nt by the enterprise covered by the Regime, the 
benefits granted by this Regime continue for an indefinite term. 
 9. Trade effects of the subsidy
17 
 At present, there are 59 active enterprises be nefiting under the Inward Processing Regime.  In 
2005, this Regime provided employment for about 11,654 people and contributed around 5 per cent of 
total exports.  In 2005, some 140 different products  were exported under this Regime to 41 countries. 
  The main destinations for exports under this  Regime include the United States and Central 
America, which account for 82 per cent and 9 per cent respectively. 
 
 It should be noted that a considerable propor tion 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 a nd Inward Processing Exports 
In Million US$ 
 
 2003 2004 2005 
Inward processing 309.0 333.3 336.8 
Total exports 6,121.9 6,281.3 7,000.6 
 
                                                      
17 See footnote 11.  G/SCM/N/146/CRI 
 Page 11 
 
 
  AMENDMENT OF THE REGULATIONS TO THE DUTY-FREE ZONE 
REGIME LAW 
 
An Article 25 ter has been added to the Regulation s to the Duty-Free Zone Regime Law 
No. 32804 
 
THE PRESIDENT OF THE REPUBLIC, 
 
THE MINISTER OF FINANCE 
 
AND THE MINISTER OF FOREIGN TRADE 
  
 In exercise of the authority conferred on them  by Article 140(3) and (18) and Article 146 of 
the Political Constitution of the Republic of Costa Rica;  Articles 25(1), 27(1) and 28(2)(b) of the 
General Public Administration Law,  No. 6227 of 2 May 1978;  Article  2(g), (h) and (i) and Article 8 
of the Establishment of the Ministry of Foreign Trade and the Foreign Trade Promotion Agency of 
Costa Rica, No. 7638 of 30 October 1996 and the amen dments thereto;  Duty-Free Zone Regime Law 
No. 7210 of 23 November of 1990 and the amendm ents thereto and Articles 50 and 175 of the 
General Customs Law, No. 7557 of 20 Oct ober 1995 and the amendments thereto. 
 
Whereas: 
 
I. The increase in foreign trade operations is one of the factors of development of our country, 
since such operations encourage export growth;  
II. The Duty-Free Zone Regime attracts foreign investment, benefiting liv ing conditions thanks 
to the creation of new sources of employment that have a positive effect on the quality of life of Costa Rican citizens;  III. As time goes by, needs arise regarding the ar eas authorized for the location of enterprises 
under the Duty-Free Zone Regime, requiring thei r expansion with a view to promoting the 
establishment of new enterprises under the regime or mo re rational use of the available areas, with the 
aim of furthering industrial developm ent and the related supervision; 
 IV. It is necessary to include rules in the Regul ations to the Duty-Free Zone Regime Law that 
properly regulate the expansion of the tota l area available for free zone enterprises;  
 
Now therefore 
 
DECREE: 
 
 Article 1.  An Article 25 ter is hereby added to the Regulations to the Duty-Free Zone Regime 
Law, Executive Decree No. 29606-H-COMEX of 18 June 2001, the text of which shall read: 
  "Article 25 ter.  Expansion of the operating area of  enterprises under the Duty-Free Zone 
Regime.  
(1) Out-of-zone enterprises
:  Enterprises located outside the zone may expand their operating 
area within an industrial zone provided that the latte r is in the jurisdiction of the customs supervisory 
office in which the beneficiary enterprise is lo cated, and upon fulfilment of the requirements and 
obligations laid down in the customs legisl ation in force for out-of-zone enterprises. 
 G/SCM/N/146/CRI 
Page 12  
 
  (2) In-zone enterprises
:  Enterprises located within the zo ne may expand their operating area: 
  (a) Within the same zone.   (b) In another zone which is under the ju risdiction of the same customs supervisory 
office as the beneficiary enterprise. 
  In the instances envisaged in (1) and (2) a bove, the beneficiary enterprises must meet the 
following conditions and requirements:  
(a) Make an additional investment, in the ar ea it wishes to expand, of at least US$150,000 
or the equivalent in the national currency. 
(b) The expanded area shall be for the receipt, deposit, inspection, production and 
clearance of goods, solely for the activity previously authorized by PROCOMER.  To that end, the expansion of the operating ar ea must fulfil the same obligations required 
by law for beneficiary enterprises of the Du ty-Free Zone Regime, in terms of customs 
supervision. 
(c) In the expanded area, the enterprise shall ma intain a permanent inventory system which 
shall be separate from inventories kept  in the area originally authorized. 
(d) Consequently, no raw materials, equipment, machinery or merchandise shall be located 
in or transferred from the beneficiary enterprise to the expanded area or vice a versa, 
and each expanded area shall be used solely for the purposes authorized, other than in 
exceptional cases duly justified by the bene ficiary enterprise and approved by the 
competent customs office by substantiated decision. 
 Applications for area expansion shall be submitted to PROCOMER for authorization and 
must expressly state the activities to be carried out in  the expanded area.  If it finds the application to 
be in order, PROCOMER shall issue an authoriza tion, subject to the requisite fiscal and customs 
controls of the new area, confirmation of which sha ll be provided by the competent customs authority. 
  All the foregoing shall be without prejudice to any relevant customs controls of enterprises 
under the Duty-Free Zone Regime, carried out by the National Customs Service. 
 
 Article 2.  Validity.  These provisions shall take  effect as from the date of their publication. 
  Done at the Office of the President of the Republic, San José, on 30 November 2005.   
  G/SCM/N/146/CRI 
 Page 13 
 
 
  AMENDMENT OF THE REGULATIONS ON THE INWARD PROCESSING 
AND DUTY REFUND REGIMES 
 
NO. 32982-H-COMEX 
 
THE FIRST VICE-PRESIDENT 
ACTING ON BEHALF OF THE PRESIDENT OF THE REPUBLIC, 
THE MINISTER OF FOREIGN TRADE 
AND THE MINISTER OF THE ECONOMY 
  
 In exercise of the authority conferred on them  by Article 140(3) and (18) and Article 146 of 
the Political Constitution;  Article 28(b) of the Ge neral Public Administration Law the amendments 
thereto, Law No. 6227 of 2 May 1978;  the S econd Protocol Amending the Central American 
Uniform Customs Code, Law No. 8360 of 24 June  2003; the General Customs Law No. 7557 of 
20 October 1995 and the amendments thereto;  the Regulations to the General Customs Law, 
Executive Decree No. 25270-H of 14 June 1996 and the amendments thereto,  
whereas  
 
1. The General Customs Law, No. 7557 of 20 October 1996 and the amendments thereto 
established, in Articles 179 et seq ., the basic rules for the Inward Processing Regime, delegating 
authority to the Executive to i ssue the requisite regulations; 
 2. The dynamics of trade today require enterprises to reduce costs and to manufacture more speedily and efficiently in order to  compete on international markets; 
 
3. Subcontracting is a tool that may be used by beneficiary enterprises of the aforementioned 
Regime to outsource part of the production process,  thus generating the establishment of production 
chains of particular interest with small and me dium-sized enterprises, in  accordance with the terms 
laid down in the General Regulations to the Law to Strengthen Small and Me dium-sized Enterprises, 
No. 8262 of 2 May 2002, Executive Decree No. 30857-MEIC of 25 November 2002; 
 
4. As well as increasing the volume of e xports, production chains promote productive 
development of local small and medium-sized enterprises through the transfer of technology and know-how;  
5. The provision of a surety, established under 65 of the General Customs Law and the 
amendments thereto, equal to the amount of th e taxes payable on raw materials and semi-finished 
products involved in subcontracting arrangements applies inter alia  to the Temporary Import Regime, 
and the regime dealt with here is the Inward Processing Regime;  6. According to Article 5 of the General Cu stoms Law, the legal provisions governing the 
customs system must be interpreted in the manner th at best ensures the development of the Republic's 
foreign trade, in keeping with the social and ec onomic circumstances prevailing at the time of such 
interpretation and with other matters  of public interest, in the light of the purposes of these provisions; 
 7. Under Article 183 of the Gene ral Customs Law, the beneficiary enterprises of the Inward 
Processing Regime are liable for any damage or lo ss in respect of merchandise entering under the 
Regime;  G/SCM/N/146/CRI 
Page 14  
 
  Now therefore, 
 
DECREE: 
  Article 1.  Articles 27, 28, 31, 32, 33, 35 and 36 of Executive Decree No. 26285-H-COMEX 
of 19 August 1997 and the amendments thereto, th e Regulations on the Inward Processing and Duty 
Refund Regimes are hereby amended to read as follows:   "Article 27.  Subcontracting of services.   Beneficiaries may subcontract, subject to an 
application to PROCOMER through the electronic m echanisms or media established for the purpose, 
a part of their production or production process provi ded that they carry out production ope rations and 
do not become trading companies only.  PROCOM ER shall ascertain that the enterprise is in 
compliance with the provisions of Article 27 bis and if appropriate shall issue the authorization within 
three working days of submission of the applicati on.  The said authorization shall be sent to the 
Department of Statistics and Registry of the Directorate by the electronic mechanisms or media 
established for the purpose. 
  The subcontracting may be with:  
(a) Other Inward Processing Regime and Duty-Free Zone Regime beneficiaries, provided 
that at least 50 per cent of the total produc tion volume of the enterprise covered by the 
Regime is produced by the contractor; 
 (b) Any natural or legal person established w ithin the national customs territory, provided 
that at least 75 per cent of the total produc tion volume of the enterprise covered by the 
Regime is produced by the beneficiary. 
 
 In this case, the Regime beneficiary enterp rise may transfer the raw materials and semi-
finished products involved in the subcontracting arrangement.   The permitted period for subcontracting shall be set by PROCOMER according to the needs 
of the party concerned, and may be extended if PROCOMER considers that the reasons for granting 
the authorization still apply;  in any event, th e maximum period including extensions may not exceed 
one year.   The contractor enterprise must submit a report on the operations subcontracted to PROCOMER at the end of the subcontracting period.  Where an extension is being sought, the report 
must be submitted together with the application th ree days before the expiry of the subcontracting 
arrangement.   If any customs irregularity is found, PROCOMER  shall so inform the Customs Supervisory 
Office immediately, for appropriate action."  
 "Article 28.  Guarantee for subcontracting arrangements.   A beneficiary wishing to enter 
into subcontracting arrangements must provide a custom s lien to ensure the return to its own premises 
of goods involved in the subcontracting arrangement s, without prejudice to Article 71 of the General 
Customs Law.  
 The lien shall be in favour of the Custom s Supervisory Office in conformity with the 
procedure laid down in Article 185 of the General Customs Law and shall be returned when customs 
is satisfied that the subcontracting process has be en ended, the raw materials and semi-finished 
products being returned to the premises of the beneficiary except in cases of indirect re-exportation 
pursuant to Article 11 of these Regulations.  G/SCM/N/146/CRI 
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 The subcontracting arrangement shall be subj ect to the customs supervision and control 
provided for in the Law and its Regulations.   The beneficiary shall be liable for payment of  any customs or tax obligations arising from 
failure to comply with the terms and conditions of subcontracting arrangements, in accordance with 
the legal and other provisions governing the matter."   "Article 31.  Issue of the deed of lien.   For any declaration of entry under the Regime of 
machinery and equipment, the corresponding deed of  customs lien must be issued and registered. 
 
 Goods qualifying as accessories of machinery and equipment, as defined in Article 3 of these regulations, shall be exem pt from this requirement. 
  In the event of applications to subcontract, pur suant to Article 27, the beneficiary shall submit 
on a yearly basis an overall customs lien, duly regist ered, of a value equal to the taxes payable on all 
the merchandise involved in the subcontracting arrangement entering under the Regime in the 
previous year, plus 10 per cent.  If the subcontr acting arrangement is the first one, or where the 
beneficiary has not engaged in subcontracting in the previous year, the value of the lien shall be fixed 
on the basis of an estimate of the value of the tax es payable on all the raw materials and semi-finished 
products involved in the subcontrac ting arrangement, plus 10 per cent. 
 
 The entry into the national cust oms territory of the raw materi als and semi-finished products 
involved in the subcontracting arra ngement, and their return to the premises of the beneficiary 
enterprise, shall take place within the subcontr acting period authorized by PROCOMER and within 
the period of validity of the overall customs lien, duly entered in the Register of Liens of the Public 
Register." 
  Article 32.  Requirements for the deed of customs lien.   The first-rank statutory lien in 
favour of the revenue authorities on machinery and equipment entering under the Regime and the raw 
materials and semi-finished goods involved in th e subcontracting arrangeme nt, and any extensions, 
renewals, partial or total cancella tions or any other legal transaction relating to the said deed must be 
recorded in writing, on pre-numbered forms duly author ized by the Directorate.  The deed must also 
be free of any deletions, smudges or interlinear a dditions, and must be written in letters, without 
numbers or abbreviations, except where these form part of a mark or emblem.   Any error or omission must be rectified by means of a separate note.  Text on the reverse of 
the document shall also be validated with the signa ture of the beneficiary, in accordance with point 
(12) of the following Article."   "Article 33.  Information to appear on the deed of lien .  The deed of customs lien must 
contain at least the following information:  
1. Surname and first names, ID document and resi dential address in the case of a natural person, 
or the trading name, name, legal ID document and dom icile in the case of a legal person;  this person 
shall be the debtor for all purposes;  2. Amount in columns of the tax payable, which mu st be at least equal to the total amount of tax 
paid on the corresponding customs declaration; 
 3. The fact that the lien is given as a firs t-rank lien, showing the name of the Customs 
Supervisory Office in favour of which the lien is given;  G/SCM/N/146/CRI 
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  4. Origin of the lien – this will be the importation of the merchandise under the Regime, 
showing the number and date of the customs declar ation in question, in the case of machinery and 
equipment, and the date of the authorization i ssued by PROCOMER in the case of subcontracting; 
 5. Description, weight, customs value, and ex act quantity of the merchandise given as guarantee; 
 
6. Location where the merchandise is to be held , and who is responsible for its safe keeping; 
 7. Location where the payment of the debt is to be  made;  this must be the same as the location 
of the customs supervisory office; 
 
8. Expiry date of the lien or extension, whic h must never exceed the period set down as the time 
for which the merchandise is to remain in Costa Rica;  9. The fact that on the expiry of the period set down as the time for which the merchandise is to 
remain in the country or the period of the su bcontracting arrangement, without the merchandise 
having been re-exported, definitively imported or return ed to the enterprise, or if it is demonstrated 
that the enterprise has used the merchandise impr operly or disposed of the merchandise otherwise 
than as authorized, the Customs Supervisory O ffice shall initiate the procedure laid down in 
Articles 36 to 38 of these Regulations for collection of the debt.  It shall also be stated that at the 
conclusion of that procedure, and after the period of  5 days set down in Article 61 of the Law, if 
voluntary payment of the taxes has not been made  the Customs Supervisory Office will proceed to 
sell the merchandise by public auction, in accordan ce with the provisions set down to this end; 
 10. The fact that entry in the Register of Liens of the Public Register is mandatory, and shall not 
be subject to the payment of any tax; 
 
11. Place and date of issue of the deed;  12. Signature of the beneficiary or its legal re presentative, duly authenticated by an attorney-at-
law, or failing that, signed by two witne sses present at the execution of the deed." 
 
 "Article 35.  Release of the customs lien in the Public Register.  On the merchandise being 
re-exported or definitively imported, or returned to the beneficiary's premises in the case of a sub-contracting arrangement, within the established d eadlines, the Customs Supervisory Office, at the 
beneficiary's request and within ten working days at most, shall send the appropriate notification to 
the Register of Lien of the Public Register, for cancellation or release of the lien." 
 
 "Article 36.  Expiry of the period for which the merchandise under lien is to remain in 
the country .  Expiry of the period for which merchandise entering under the Regime is to stay in the 
country without the merchandise have  being re-exported or definitivel y imported or returned to the 
beneficiary's premises in the case of subcontrac ting arrangements, shall place the beneficiary under 
the obligation to pay all taxes, fines, interest and other surcharges of any kind arising from its 
importation. 
  The same obligation shall apply to beneficiari es that have made improper use of merchandise 
covered by the Regime or disposed of it otherwi se than as authorized, without prejudice to any other 
penalties that may apply." 
 
 Article 2.  An Article 27 bis and Article 28 bis are hereby added to Executive Decree 
No. 26285-H-COMEX of 19 August 1997 and the amen dments thereto, Regulations on the Inward 
Processing and Duty Refund Regimes.   G/SCM/N/146/CRI 
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   "Article 27 bis.  Requirements for applications to subcontract .  An application to 
subcontract much meet the following requirements:  1. The subcontractor must be duly registered with PROCOMER. 
2. The beneficiary and the subcontractor must pr ovide certification issued by an independent 
authorized public accountant attesting to the existe nce of up-to-date inventory of raw materials, 
products in process and finished products.  The certifi cation shall be sent with the first application to 
subcontract. 
3. Certification from an independent authorized  public accountant, indicating in detail in 
quantities and measurement units all the inventories of the merchandise involved in the subcontracting 
arrangement sent to the subcontractor. and certificat ion that all the merchandise was returned to the 
contractor, detailing the products received in quantities and measurement units, and any waste 
generated and delivered as a result of the proces s.  The abovementioned certification must be 
submitted within 15 working days of the submis sion of the report on subcontracted operations 
required under Article 27 of these Regulations. 
4. In the subcontracting arrangement the per centages laid down in Article 27 of these 
Regulations must not be exceeded. 
5. The beneficiary shall provide custom lien on the terms laid down in Article 28 of these 
Regulations. 
6. The beneficiary and the subcontractor must be up-to-date with their tax obligations, and must 
so demonstrate by means of a sworn statement.  The latter must also be up-to-date with payments of 
contributions to the Costa Rica Social Security Fund. 
7. The report to be submitted by the beneficiary at the end of the subcontracting arrangement 
must not be outstanding." 
 "Article 28 bis.  Suspension of the subcontracting arrangement .  Whenever a competent 
authority finds failure to fulfil some requirement or obligation pertaining to the Regime or any 
requirement pertaining to the authorization to subcont ract or any other requirement, it shall so inform 
the competent bodies for the purpose of initiating th e administrative procedure required by law." 
 Article 3.  These Regulations shall take e ffect as from the date of their publication. 
 Done at the Office of the President of the Republic, San José, 10 March 2006. 
 
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