Forming New Horizons – Expanding into Costa Rica
Country Spotlight:
GDP – $86.5 billion?
Population – 5.2 million?
?
The Commercial Brief:
Costa Rica’s economy is heavily driven by three economic sectors: Services at 67.62%, Industrials at 20.65%, and Agriculture at 13.41%. Costa Rica isn’t a particularly large economy and is 73rd largest in the world. Its forecasted GDP growth for 2024 is a healthy 4%.
Costa Rica had experienced persistently high inflation since the mid-eighties until 2010 and but for a recent spike in 2022 it now hovers around 0.3% (although it is not forecast to become deflationary) this makes it lower than most parts of the world. Corporate income tax (CIT) is taxed at 30% which is a touch high.?
Costa Rica is renowned for its vibrant and diverse cultural heritage, deeply influenced by a mix of indigenous, Spanish, and Afro-Caribbean influences. It is particularly famous for its colourful and lively festivals such as the Fiestas Palmares and the Carnival, which showcase a variety of traditional dances, music, and costumes that celebrate the nation's rich history and ethnic diversity. Costa Rican cuisine, with its emphasis on fresh local ingredients like corn, beans, rice, and a variety of tropical fruits, reflects the country's agricultural traditions and its people's connection to the land. The country is also known for its dedication to conservation and ecotourism, which is integral to its cultural identity, drawing visitors from around the world to its expansive national parks and protected areas. This commitment to the environment is part of a broader cultural emphasis on sustainability and peace, underscored by the abolition of its army in 1948 and the allocation of those funds to education and health care.
Costa Rica has a wide variety of natural resources that support its economy and environmental initiatives. The country is particularly rich in biodiversity, boasting numerous species of plants and animals within its extensive system of national parks and protected areas. This biodiversity is not only a vital ecological resource but also a cornerstone of its ecotourism industry. Additionally, Costa Rica has substantial water resources, which it harnesses for hydroelectric power, contributing to its aim of using 100% renewable energy. Agricultural resources are also significant, with coffee, bananas, and pineapples being major export crops. Moreover, Costa Rica has mineral resources including gold and silver, though mining activities are limited due to strong environmental laws. These natural assets play a crucial role in the nation’s sustainability goals and its global reputation as a leader in conservation and environmental protection.
Companies looking to expand in Costa Rica, will find the most fruitful industries include the technology and information technology sectors, which are rapidly expanding and feature a concentration of software development and IT services. The life sciences and medical devices sectors are also significant, with Costa Rica hosting several multinational companies in these fields. Additionally, the tourism and hospitality industry, crucial to the country's economy, offers opportunities in management, customer service, and operations. The green energy sector is emerging as well, particularly in renewable energy projects like wind and solar, reflecting the country’s commitment to sustainability. Lastly, agriculture remains a foundational sector, especially for roles in agricultural science and export-related business operations, capitalizing on the country’s rich biodiversity and established export markets.
In summary, whilst Costa Rica is a relatively small country in terms of population and GDP it has a good strategic location in being near to the United States with access to both the Pacific and Caribbean coasts, it has good economic growth prospects and low inflation, along with a well educated workforce, this makes it a good destination for international expansion.?
领英推荐
Challenges of Expanding into Costa Rica
In our experience setting up a permanent overseas entity in Costa Rica without Global EOR support can take up to 4 months, including the entity incorporation, setting up the bank account and concluding the local registrations. This timeline does not include license applications if needed, import/ export permits and certain industry specific government registrations. Some of the required registrations in Costa Rica are as follows:?
In Costa Rica, any form of contract is valid for employment agreements, however it is strongly recommended to always maintain all labour contracts in writing. Digital signatures are valid as long as they are registered with the Central Bank as the certifying authority in Costa Rica. Health and safety is also a mandatory implementation, with different requirements depending on the industry a company is operating in. For example, companies with more than 10 employees require an Occupational Safety Officer and construction companies must certify, at all times, the provision of safety equipment and supervision of the employees.?
Costa Rica has joined other Central and South American countries in passing legislation to regulate teleworking. Modifying only and exclusively the way in which the work is performed but maintaining the same benefits and obligations both employers and employees. The implementation of the regulation to regulate teleworking must be voluntary and agreed in writing between the employer and employees.?
It is, therefore, essential for employers to familiarise themselves with the above. To avoid complications and business risk and enter the market quickly and compliantly, utilise a Global EOR in Costa Rica that has dedicated and extensive in-country personnel, HR, Legal, Payroll, Compliance & Immigration teams that can support you and your organisation directly.
?
If you're thinking about expanding into Costa Rica, we can help you plan for this and mitigate compliance risk. We're happy to provide guidance, simply get in touch and we will do our best to help.