WORLD TRADE  
ORGANIZATION  G/SCM/N/123/CRI 
G/SCM/N/128/CRI 5 July 2005 
 
 
(05-2913) 
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 SCM Agreement  
 
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 2005,  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/123/CRI 
G/SCM/N/128/CRI Page 2 
 
 
  
CONTENTS  
 
Page
 
 
Updating Notification .......................................................................................................... ................. 1 
 
ANNEXES  
 Executive Decree No. 32232 of 16 December 2004........................................................................... 11 
Law 8419 of 28 June 2004....................................................................................................... ........... 14 
Executive Decree No. 32098 of 23 September 2004 .......................................................................... 17  G/SCM/N/123/CRI 
 G/SCM/N/128/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 2004. 
 
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 thereto2. 
                                                      
 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. G/SCM/N/123/CRI 
G/SCM/N/128/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 thereto4. 
 
Regulations Implementing the General Customs Law, Chapter X (Duty-Free Zone Regime), 
Executive Decree No. 25270-H of 28 June 19965 and amendments thereto6. 
 
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; 
                                                     
 
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 
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, and Executive Decree No. 32232 of 16 December 2004 (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/123/CRI 
 G/SCM/N/128/CRI 
 Page 5 
 
 
  
 (c) exemption from all tax and consular fees on imports of fuel, oil and lubricants 
required for the operation of such enterprises; 
 
 (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; 
 G/SCM/N/123/CRI 
G/SCM/N/128/CRI Page 6 
 
 
  (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; 
  (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. 
 
                                                     
 
 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/123/CRI 
 G/SCM/N/128/CRI 
 Page 7 
 
 
  (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. 
 
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,  and payment of land tax, for a period 
of ten years.
8 
 
• exemption from all taxes on profits and an y other tax for which the tax base is 
determined according to gross or net earni ngs, 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 l ess developed 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 10 years.
10 
 9. Trade effects of the subsidy
11 
 At the present time there are 127 enterprises receivi ng the benefits of Duty-Free Zone status.  
Between them, those firms generate d 52 per cent of the total exports of Costa Rica in 2004, as 
compared with 1991, when 81 enterprises covere d by the regime accounted for only 9.3 per cent of 
                                                      
 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 2004 
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/123/CRI 
G/SCM/N/128/CRI Page 8 
 
 
 total exports.  In 2004, roughly 1000 different produc ts were exported to 97 countries under the Duty-
Free Zone regime.   The vigorous activity of Duty-Free Zone firms can be seen not just from the quantity of 
exports, which have grown by a factor of 8 as compared to 1995, but also from the positive impact on 
the economy from the point of view of generati ng employment.  Duty-Free Zone firms directly 
employ approximately 36,508 workers on average.   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.  
Costa Rica:  Total Exports and Duty-Free Zone Exports 
In Million US$ 
 
 2002 2003 2004 
Duty-Free Zone 2,665.3 3,326.3 3,264.6 
Total exports 5,294.3 6,121.9 6,303.4 
 
 
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 2004.  
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. 
  G/SCM/N/123/CRI 
 G/SCM/N/128/CRI 
 Page 9 
 
 
 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 199614, and amendments thereto.15 
  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 
                                                     
 
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. 
 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 2002). G/SCM/N/123/CRI 
G/SCM/N/128/CRI Page 10 
 
 
 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 
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 61 active enterprises be nefiting under the Inward Processing Regime.  In 
2004, this Regime provided employment for about 11,654 people and contributed around 5 per cent of 
total exports.  
 In 2004, about 87 per cent of exports under th e Inward Processing Regime were sent to the 
North American market, the balance going to South American countries, among others.   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 and Inward Processing Exports 
In Million US$ 
 
 2002 2003 2004 
Inward processing 332.5 309.0 333.4 
Total exports 5,294.3 6,121.9 6,303.4 
                                                      
17 See footnote 11.  G/SCM/N/123/CRI 
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AMENDMENT OF THE REGULATIONS TO THE DUTY-FREE ZONE REGIME LAW 
 
NO. 32232 
 
THE PRESIDENT OF THE REPUBLIC 
 
THE MINISTERS OF FINANCE, THE ECONOMY, INDUSTRY AND TRADE 
 
AND FOREIGN TRADE 
 
  Pursuant to Article 140(3) and (18) a nd Article 146 of the Political Constitution, 
Article 28(2)(b) of the General Public Administ ration Law, No. 6227 of 2 May 1978;  the Law to 
Approve the Second Protocol Amending the Centra l American Uniform Customs Code, No. 8360 of 
24 June 2003;  the General Customs Law, No. 7557 of 20 October 1995, and its amendments;  the 
Duty-Free Zone Regime Law, No. 7210 of 23 Nove mber 1990, and its amendments;  the Regulations 
to General Customs Law, No. 25270-H of 14 June 1996,  and its amendments;  and the Regulations to 
the Duty-Free Zone Regime Law, Executive Decree No. 29606-H-COMEX of 18 June 2001, and its amendments. 
 
 
Whereas: 
 
 
 I.—The Regulations to the Duty-Free Zone Re gime Law regulate the Duty-Free Zone Regime 
and lay down the conditions under which the enterp rises covered by the regime may sell to local 
markets.   II.—Article 57 of the aforementioned instrument  establishes that when enterprises benefiting 
from the regime make sales on the local market, th e exemption they enjoy shall be reduced by a 
percentage equal to that of their local sales for each financial period. 
  III.—The current regulation is excessive in te rms of the machinery and equipment entering 
under the regime and used in the production of goods for the local market, as it reduces the percentage 
of the exemption in each financial period even wher e the percentage of sales to the local market 
shows no change from one period to another, creating a disproportion between the use of the 
machinery for production for the domestic market and the taxes paid therefor. 
  IV.—Fairness demands that th e percentage of the exemption for machinery and equipment be 
reduced once only, on the basis of the percentage of  local sales actually made, unless such percentage 
increases, in which case the reduction in the exemption should be adjusted accordingly. 
 
 V. —The Ministries of the Economy, Industry and Trade, Foreign Trade and Finance shall be responsible for ensuring the simplification of formalities, and the improved regulation and the 
soundness of local production th rough the production chains, now therefore: G/SCM/N/123/CRI 
G/SCM/N/128/CRI Page 12 
 
 
  
DECREE: 
  Article 1—Article 57 of Decr ee No. 29606-H-COMEX of 18 June  2001 is hereby  amended to 
read as follows: 
  "Article 57.—Where duty-free zone regime beneficiary enterprises make sales of goods 
and/or services into the national Customs territo ry, as referred to in the preceding Article, the 
percentage of the exemption applie d to imports of machinery, equi pment and raw materials, and the 
percentage of the exemption from tax on profits, sha ll be reduced on a pro-rata basis according to the 
ratio of goods and services brought in to the natio nal Customs territory to the total value of the 
enterprise's sales of goods and services.  In the case of the exemption from tax on profits, the reduction shall be made for each relevant financial pe riod.  In the case of the tax exemption applied to 
equipment and machinery, the reduction shall be ma de once only and on the basis of the financial 
period in which local sales were initiated.  Ta xes payable on machinery and equipment used to 
produce goods and services sold locally shall be asse ssed by the enterprise itself and submitted to the 
competent Customs office no later than 5 months afte r the end of the ordinary financial period or the 
special financial period duly authorized for the ente rprise by the Directorate-General of Taxation.  In 
the case of machinery and equipment which the enterpri se brings in subsequent to the regime and uses 
in production processes for local sales,  the percentage of taxes payable shall be settled in the relevant 
financial period. 
  When the enterprise's sales to  the local market amount to a higher percentage than that of 
previous periods and, as a result, the percentage or iginally paid on machinery and equipment is lower 
than the current percentage of local sales, the en terprise shall assess and pay the tax corresponding to 
such difference. 
  For the purposes of compliance with the provisions  of the last paragraph of Article 22 of Law 
No. 7210 and the amendments theret o, the taxes and customs procedures applying to any like imports 
from abroad shall apply to goods and services that ar e brought in to the domestic market.  Such taxes 
shall be paid upon entry into the national Customs territory. 
 
 The calculation of the proportion of goods and services brought in to the national Customs 
territory shall be carried out acco rding to the following formula: 
  DS (Domestic Sales) VALUE x 100 = Percentage of Domestic Sales 
 TS (Total Sales) VALUE 
 
 The calculation of the tax payable on machinery, equipment and raw materials shall be carried out as follows:   TT (Total Tax) x % Domestic Sales = Tax Payable. 
 
 In addition to the foregoing, the following rules shall apply in assessing the amount of tax payable on machinery, equipment and raw materials used by the enterprise in the production process 
for goods and services cleared through Custom s in to the national Customs territory: 
 
 (a) The regime beneficiary shall provide th e competent Customs office with a certificate 
for the machinery, equipment and raw materials used in the production process for the end products and/or services for local  sale, issued by a competent professional 
and showing the number of the Duty-Fr ee Zone Customs Declaration under which  G/SCM/N/123/CRI 
 G/SCM/N/128/CRI 
 Page 13 
 
 
 they entered the country.  In the case of ser vice enterprises, the certificates shall be 
issued, likewise by a competent professional,  on the basis of the commercial invoices 
covering the sales. 
 
 They shall also give details of any goods u sed in the service, and the cost of the service. 
  (b) Promotora de Comercio Exterior (PROCOMER) shall provide the competent 
Customs office with a projection of total sales and local sales, submitted by the enterprise for the relevant financial pe riod, expressed in FOB values in Central 
American pesos, so that the Customs office may set up the required monitoring 
arrangements.  On the basis of the informa tion submitted by the beneficiary enterprise 
in the annual operations report, at the e nd of the financial period PROCOMER shall 
submit to the competent Customs office, w ithin 5 months following the end of the 
ordinary financial period or, where applicab le the special financial period authorized 
for a specific enterprise by the Directorate-Ge neral of Taxation, the final amount in 
colons of the total and local sales made by the beneficiary, and the percentage of the sales made on the local market, for the purposes of self-assessment of the corresponding taxes.  The foregoing shall be without prejudice to the jurisdictions established in Article 12 of the Duty-Fr ee Zone Regime Law, No. 7210, and its 
amendments. 
 
 (c) The customs value of the goods shall be set in accordance with the valuation 
procedures in force at the time of acc eptance of the Customs declaration. 
  (d) Liability for taxation shall be governed by  the provisions of Article 55 of the General 
Customs Law. 
  (e) The self-assessment and payment of the taxes shall be governed by the relevant 
provisions of the final importation procedure in force. 
  (f) In the case of locally purchased raw materi als which have been incorporated in the 
end product, payment of selective consum ption tax, sales tax and taxes on profits 
shall be made on the basis of the procedure laid down for this purpose by the Directorate-General of Taxation." 
  Single transitory provision.—The Directorate- General of Taxation sha ll have one month from 
publication of this Decree in which to issue th e procedure to apply under (f) of this Decree. 
  Article 2—Entry into force.  As from the date of publication.   Done at the Office of the President of the Republic.—San Jose, on 16 December 2004. G/SCM/N/123/CRI 
G/SCM/N/128/CRI Page 14 
 
 
  
AMENDMENT OF THE GENERAL CIVIL AVIATION LAW, NO. 5150, AND ITS 
AMENDMENTS, AND OF THE GENERAL CUSTOMS LAW, NO. 7557, AND ITS 
AMENDMENTS. 
LAW NO. 8419 
THE LEGISLATIVE ASSEMBLY OF THE REPUBLIC OF COSTA RICA HEREBY 
DECREES: 
THE GENERAL CIVIL AVIATION LAW, NO. 5150 AND ITS AMENDMENTS, AND THE 
GENERAL CUSTOMS LAW, NO. 7557, AND ITS AMENDMENTS, ARE AMENDED AS 
FOLLOWS 
 Article 1— Articles 41, 42, 222 and 224 of the General Civil Aviation Law, No. 5150 of 
14 May 1973, and its amendments, sha ll be amended to read as follows: 
  "Article 41.—Aircraft registered in anothe r State may acquire Costa Rican nationality and 
registration, subject to prior cancellation of foreign registration.  However, an owner or leaser of a 
foreign aircraft importing the latter lawfully a nd requesting its registration in the Costa Rican 
Aeronautical Register may obtain a provisional op erating permit for thirty days, extendable up to a 
maximum of ninety days, for the purpose of comply ing with and demonstrating compliance with the 
requirement to cancel registration in the aircraft's country of origin.  
 Aircraft leased by Costa Rican compani es in possession of an air services operations 
certificate may likewise be registered and assigne d the appropriate distinguishing mark denoting 
Costa Rican nationality, subject to prior cancellati on of foreign registration, where the Costa Rican 
company in question becomes an operator for the purpo se of providing local or international services.  
The registration shall be valid for the period approv ed by the Directorate-General of Civil Aviation 
for the contract of lease and must have the express a pproval of the aircraft's owner.  Such registration 
shall not imply transfer of the aircraft's ownership.     Article 42.—Entry of an aircraft in the Cost a Rican Aeronautical Register may be by the 
owner, the leaser as prescribed in the previous  article, or anyone legally entitled therefor. 
 
 Only natural or legal persons in possession of an air services operations certificate may 
register in the Costa Rican Aeronautical Register ai rcraft to be used for public transport services or 
paid airborne work.   Private service aircraft, to be used solely  for the owner's own purposes, may likewise be 
registered by foreigners having legal residence in the country." 
  "Article 222.—Costa Rican companies in po ssession of an air services operations certificate 
may lease or lease-purchase aircraft registered, abro ad without crew.  The Directorate-General of 
Civil Aviation shall approve lease or lease-purchase contracts for such aircraft for a period of up to five years.   
 
 When the lease period exceeds one year, a fee of 4.5 per cent of the yearly lease price shall be 
paid annually from the second year.   G/SCM/N/123/CRI 
 G/SCM/N/128/CRI 
 Page 15 
 
 
  The fee shall on no account amount to more  than six thousand United States dollars 
(US$6,000.00) per year per aircraft.  Lease contract s for aircraft to be used in agricultural aviation 
services, international air transport and internatio nal freight transport shall be exempt from the 
aforementioned fee. 
 
 The Civil Aviation Technical Council shall collect the fee, retaining 50 per cent of it for the construction and maintenance of the terminals of local  public airports that are tourist destinations.  
The remaining 50 per cent shall be transferred to th e Costa Rican Tourism Institute to be used in 
financing its regional information and tourism promotion offices, beginning with those of Guanacaste, 
Puntarenas and Limón." 
  "Article 224.—Contracts for the use of aircra ft shall be notarized and entered in the 
Aeronautical Register."  
 Article 2 —The heading of Title IV, Chapter III of the General Civil Aviation Law, No. 5150, 
and its amendments, sha ll be amended as follows: 
 
"TITLE IV 
 
CHAPTER III 
CONTRACTS FOR USE OF AIRCRAFT" 
  Article 3 —Title IV, Chapter III of the General Civil Aviation Law, No. 5150, and its 
amendments, shall be supplemented by the following provisions:  
 (a) Article 44, by a new indent (VII) which shall read: 
 "Article 44.—   VII. By expiry of the lease contract or cancellation of the registration of the lease contract, by the Directorate-General of Civil Aviation."  
 (b) Articles 318 and 319;  the numbering of the subsequent articles shall be adjusted and the 
text shall read as follows:   "Article 318.—Costa Rican companies in po ssession of an air services operations certificate 
may interchange aircraft, where the contracting par ties have agreed to thei r reciprocal use without 
crew. 
  Article 319.—Contracts for the interchange of airc raft may take the form of reciprocal lease 
agreements."   Article 4 —Article 165 of the General Customs Law,  No. 7557 of 20 October 1995, and its 
amendments, shall be amended to read as follows: 
  "Article 165.— Temporary import regime .  The temporary import regime is a customs 
regime under which goods may enter the customs territo ry free of import taxes for a specified period.  
The goods must be re-exported or definitively im ported without undergoing any change or processing 
whatever, within a period established by regulati on according to the purpose of the importation.  Such 
period shall not exceed one year except for the tempor ary importation of aircraft referred to in (j) of 
the next article.  The period of validity of temporar y importation referred to in (j) shall be determined 
by the period established in the contract, duly approv ed by the Directorate-General of Civil Aviation, G/SCM/N/123/CRI 
G/SCM/N/128/CRI Page 16 
 
 
 which may not exceed five years.  To qualify for th is regime, such companies shall not require the 
posting of a guarantee.   Goods imported temporarily shall be clearly identifiable by any reasonable means that the 
Customs authority may establish and shall comply  with the applicable non-tariff regulations." 
  Article 5 —Article 166 of the General Customs La w, No. 7557, shall be supplemented by a 
new indent (j), which shall read as follows:  
 "Article 166.— Goods category  
  (j) Aircraft on lease or lease-purchase for u se in air services supplied by companies in 
possession of an operating certificate granted by the Costa Rican aeronautical authority, pursuant to 
Article 222 of the General Civil Aviation Law, No. 5150 of 14 May 1973, and its amendments." 
 
 Entry into force:  as from the date of publication.   Done at the Office of the President of the Republic, San José, on 28 June 2004.  G/SCM/N/123/CRI 
 G/SCM/N/128/CRI 
 Page 17 
 
 
  
REPEAL OF THE AMENDMENT OF THE REGULATIONS TO THE 
GENERAL CUSTOMS LAW 
 
NO. 32098 
 
THE FIRST VICE-PRESIDENT 
ACTING ON BEHALF OF THE PRESIDENT OF THE REPUBLIC 
AND THE MINISTER OF FINANCE 
 
 Pursuant to Article 140 (3) and (18) a nd Article 146 of the Political Constitution;  
Articles 25 (1), 27 (1) and 28 (2) (b), of the General Public Administration Law, No. 6227 of 2 May 1978;  the General Customs Law, No. 7557 of 20 October 1995 and the Regulations thereto 
issued by Executive Decree No. 25270-H of 14 June 1996 and its amendments. 
 
 
Whereas: 
 
  I.—By Executive Decree No. 32006-H of 13 Ma y 2004, published in the Official Journal 
La Gaceta  No. 152 of 5 August 2004, Article 250 bis was added to Executive Decree No. 25270-H – 
Regulations to the General Customs La w – published in Supplement No. 37 to La Gaceta  No. 123 of 
28 June 1996.   II.—Under the aforementioned amendment, clearing was applied as a means of complying  
with customs tax obligations, so that  in applications for this form of  compliance in respect of credits 
of a like nature administered by the Directorate-General of Taxation, customs declaration would be automatic.   III.—In view of the disadvantages it entails in terms of practical applicability, the aforementioned procedure needs to be repealed in order to safeguard the interests of the Treasury, 
now therefor : 
  
DECREES: 
 
 
 Article 1—Executive Decree No. 32006-H of 13 Ma y 2004, published in the Official Journal 
La Gaceta  No. 152 of 2 August 2004, is hereby repealed. 
  Article 2—Entry into force:  as from the date of publication.  
 Done at the Office of the President of the Republic, San José, on 23 September 2004. 
 
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