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Costa Rica Import Regs.: Tariffs & Taxes

Questions and answers about prohibited imports, labeling requirements, customs valuation as well as tariffs & taxes of Costa Rica.

Costa Rica Import Regs.: Tariffs & Taxes

Postby bridgat » Tue Nov 18, 2008 5:04 am

Customs duties generally range from 1 to 15 percent ad valorem. Duties on imports of capital goods and most finished products are one percent and 15 percent, respectively. Duties on raw materials, bulk grains, and oilseeds have been one percent since 1996. Most products imported from member countries of the Central American Common Market (CACM) are exempt from customs duties.

The General Customs Law No. 7557 provides for the following customs regimes that allow tariff concessions: free zones (see section (3)(iv) below), re-import in the same state, re-export, inward processing, temporary export for outward processing, drawback, and temporary import and export. The distinctive features of these special customs regimes are described in the table below:

Regime Features Period Legal basis
Free zone Exemption from all taxes on imports of raw materials, spare parts, packing materials and other products, machinery, equipment, replacement parts, fuel and oil Article 1 of Law No. 7210
Re-import in the same state The re-import regime allows Costa Rican or cleared goods that have been definitively exported and return in the same state to enter the customs territory free of duty and taxes Within three years as of the date of acceptance of the declaration of definitive export Articles 177, 178, Law No. 7557
Article 1, Law No. 8373 of 18 August 2003
Re-export The re-export regime allows foreign goods that have entered Costa Rica but not been imported definitively to leave the customs territory. Goods that have been abandoned or regarding which there are justified grounds for assuming that a criminal customs offence has been committed may not be re-exported
Inward processing Allows goods to enter Costa Rican customs territory for the purpose of processing, with suspension of all taxes and subject to security being provided. These goods must be re-exported within the time-limits laid down in the regulations after having undergone processing, repair, reconstruction, mounting, assembly, or after being incorporated in systems, 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 and the relevant provisions issued by the customs administrative authority Articles 179, 187, Law No. 7557
Article 1, Law No. 8373 of 18 August 2003
Temporary export for outward processing The temporary export for outward processing regime allows the temporary export of goods that move freely in Costa Rican customs territory for the purpose of processing, working or repair abroad and subsequent re-import
Drawback Allows the amounts actually paid or deposited as duty with the tax authorities to be refunded as a result of the definitive import of inputs, packaging or wrapping incorporated into products for export, provided that they are exported within 12 months as of the date of import of these goods. The regulations define the criteria to be met by interested parties in order to be eligible for this regime, as well as the time-limits for the authorities to refund the taxes actually paid 12 months as of the date of import Article 190, Law No. 7557
Article 1, Law No. 8373 of 18 August 2003
Duty-free shops Goods imported under this procedure are not subject to taxes. They must be in authorized shops or premises Article 134, Law No. 7557
Samples of no commercial value Samples of no commercial value are not subject to payment of import duty Article 120, Law No. 7557
Temporary import and export regime Temporary import is a customs regime that allows goods to enter customs territory with suspension of import duty. The goods must be re-exported or imported definitively without any alteration or processing, within the period laid down in the regulations and in accordance with the purpose of the import. This time-limit may not exceed one year except in the case of temporary import of aircraft, which may not exceed five years Five years Article 165, Law No. 7557
Article 4, Law No. 8419 of 28 June 2004
Source: WTO

In addition, the following internal taxes apply both to Costa Rican and imported products: (i) general sales tax (Impuesto General sobre las Ventas – IGV); (ii) the selective consumption tax (Impuesto Selectivo de Consumo – ISC); (iii) the special tax on alcoholic and non-alcoholic beverages, toilet soap and hydrocarbons; (iv) the Institute for Municipal Promotion and Support (Instituto de Fomento y Asesoría Municipal – IFAM) tax; (v) the Agrarian Development Institute (Instituto del Desarrollo Agrario – IDA) tax; and (vi) the general forestry tax (on timber) imposed on the value of logs and sawn wood.

Sales Tax: A 13 percent sales (value-added) tax is paid upon purchase of most goods and services, included imported goods, not destined for official use by the central or local governments. Exemptions from payment of the IGV include export contracts and temporary import regimes; products in the basic basket; school uniforms; certain inputs for agriculture, fishing, the pharmaceutical industry, medicines and medical equipment.

Consumer or Excise Tax (Impuesto Selectivo de Consumo): The ISC applies to beer, wine and other fermented beverages; mixtures of fermented beverages; undenatured ethyl alcohol of an alcoholic strength by volume of less than 80 per cent; spirits, liqueurs and other spirituous beverages; cigars and cigarettes and other tobacco; domestic electrical appliances; vehicles; mastics and paints; cosmetics, soap, and hair preparations. The ISC is imposed on production and the national packaging process. For imported goods, it is calculated by adding import duties to the customs value.

On October 1, 2007, the Customs agency issued Circular DGT-143-2007 revising the specific tax rates for selected consumer items. The new rates can be obtained by calling 1-800-usa-trad(e).

Specific Tax as of October 1, 2007
Harmonized Code Specific tax per unit of Consumption
2009.11.00.90

9.03
2009.12.00.00

9.03
2009.19.90.00

9.03
2009.21.00.00

9.03
2009.29.90.00

9.03
2009.31.00.00

9.03
2009.39.00.90

9.03
2009.41.00.00

9.03
2009.50.00.90

9.03
2009.61.00.00

9.03
2009.69.90.90

9.03
2009.71.00.00

9.03
2009.79.90.90

9.03
2009.80.20.90

9.03
2009.80.30.90

9.03
2009.80.90.20

9.03
2009.80.90.90

9.03
2009.90.00.92

9.03
2009.90.00.93

9.03
2009.90.00.99

9.03
2201.10.00.11

9.03
2201.10.00.91

9.03
2201.90.00.91

9.03
2202.10.00.21

9.03
2202.10.00.29

9.03
2202.10.00.40

9.03
2202.90.10.10

9.03
2202.90.10.20

9.03
2202.90.10.30

9.03
2202.90.10.90

9.03
2202.90.90.21

9.03
2202.90.90.22

9.03
2202.90.90.29

9.03
2202.90.90.91

9.03
2202.90.90.99

9.03
2106.90.30.11

12.16
2202.10.00.11

12.16
2202.10.00.12

12.16
2202.10.00.13

12.16
2202.10.00.14

12.16
2202.10.00.31

12.16
2202.10.00.32

12.16
2202.10.00.33

12.16
2202.10.00.34

12.16
2202.90.90.11

12.16
2202.90.90.12

12.16
2202.90.90.13

12.16
2202.90.90.14

12.16
2201.10.00.19

4.22
2201.10.00.99

4.22
2201.90.00.99

4.22
3401.11.11.00

0.153
3401.11.19.00

0.153
3401.11.20.00

0.153
3401.11.30.00

0.153
Source: CR Treasury


Exemptions from payment of the ISC include export contracts and temporary import regimes; products in the basic basket; school uniforms; certain inputs for agriculture, fishing, the pharmaceutical industry, medicines and medical equipment.

IFAM Tax:

The IFAM tax is intended to finance the Institute's activities (Law No. 6283). It is imposed on the c.i.f. value plus: the tariff, the ISC, the 1 per cent tax imposed by Law No. 6946 and the IDA tax (see below). In 2006, the IFAM tax was imposed at the following rates: 10 per cent on liqueurs, distilled beverages and other spirituous beverages, 10 per cent on imported beer and 3 per cent on local beer.

Surcharge Tax: A one-percent surcharge is imposed on most imports, except medicines and raw materials for industry.
Estimated Profit Tax: A tax charged on very select product categories including some automobile categories that can be reclaimed after the sale of the item.

Duties and taxes are calculated as follows:

Ad valorem duty: Levied on the CIF value of the imported item

Selective consumption tax: Levied on the CIF value plus the ad valorem duty

Sales tax: Levied on the sum of the CIF value, ad valorem duty and selective consumption tax, plus the surcharge and estimated profit tax

Surcharge (Law 6946): Levied on the CIF value only

Estimated Profit Tax: Levied on the CIF value plus the ad valorem duty plus the consumption tax plus the surcharge

SOFTWARE/HARDWARE:

Duties and taxes are assessed on the cost, insurance and freight (CIF) value of the software, including the intellectual property value, as stated on the accompanying documentation. Customized and prepackaged software are not treated differently. For the purposes of taxes and duties, there is no distinction between new and remanufactured products. Software installed on imported computer equipment will have its value included in the total value of the shipment.

Costa Rican customs does not distinguish between software updates and original software packages.

There are no statutes that apply to digital distribution of software over the internet. No import duties/taxes are charged on software delivered to the end user over the internet. However, the local manufacture and sale of CDs containing software imported by a licensed/authorized distributor will be subject to consumption taxes, sales taxes, and income taxes. Local law permits a local company that imports and markets software to take legal action against a company that imports the same product electronically to avoid duties and taxes and then, for example, presses the CDs in Costa Rica for marketing and sale. U.S. companies importing products electronically for local manufacture and distribution should seek legal counsel in advance to avoid being charged with an unfair competition suit under local law.

Software licenses are classified under the HS code 4911 and are subject to total import duties/taxes of 29.95%. Total import duties/taxes on software are 16.39%. No witholding taxes apply on software licenses.

If a personal computer is purchased as a system, duties/taxes are assessed on the computer system, not on the individual components (cpu, keyboard, monitor, etc.).

Services

According to the "Direccion General de Tributacion Directa," services related to the sale of software are subject to consumption taxes, sales taxes, and income taxes. A foreign individual/company could be subject to a 15% withholding of his/her compensation.

According to Costa Rican immigration authorities, U.S. information technology solution providers are permitted to send personnel into Costa Rica to set up hardware/software related to systems. The local company requiring this service must request from immigration authorities a temporary work permit certifying the following:

1) the job to be done

2) the need to bring someone from outside the country to do the job

3) whether payment will occur inside or outside of Costa Rica

The U.S. technician must bring with him/her a letter from his company explaining the job to be performed in Costa Rica. This letter must be authenticated by a Costa Rican consul in the U.S.
bridgat
 
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