Costa Rica is located in Central America between Panama and Nicaragua. Dubbed “the Switzerland of the Americas” Costa Rica offers many advantages and favorable tax conditions. The high degree of privacy is one of the biggest advantages Costa Rica holds however in March 2012 Costa Rica signed the Convention on Mutual Assistance in Tax Matters with the Organisation for Economic Co-operation and Development (OECD). This could in effect change the privacy provisions Costa Rica is famous for however the required legislation has not been passed into Law at the current time.
Although the official language of Costa Rica is Spanish English is also widely spoken. Company names can be recorded in either Spanish or English.
Costa Rica’s economy was originally agriculturally based however recent diversification has taken place and Costa Rica has become a member of the World Trade Organisation in addition to developing numerous incentives to promote business and trade.
The most common form of company used in Costa Rica is the “Sociedad Anonima” as shareholders are not liable for the actions of the company. The main advantages of the S.A. are listed below:
Key benefits of a Costa Rica S.A:
- A S.A. offers a high degree of privacy and anonymity.
- 4 Members are required for a S.A – President, Secretary, Treasurer & Controller. Board Directors appear on public record.
- Shareholders do not appear on public record.
- Costa Rica is not a member of the Hague Convention therefore if a bank account is planned to be opened outside of Costa Rica then the corporate documents have to be legalized. Legalisation costs depend on the specific countries Consulates rates.
- Timescale of Incorporation – between 20-40 working days.
- An S.A operates a territorial taxation principle; the company only pays taxes according to the income generated in Costa Rica.
- There are no reporting or accounting requirements.
- Costa Rica is not considered an offshore entity and has a number of Free Trade Agreements in place (US, Canada, Mexico, Chile, Dominican Republic and the Caribbean). There are also negotiations underway with China and the EU.
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The overseas banking industry is a billion-dollar business. Its no surprise that during the last decade, criminals have discovered ways to circumvent and exploit the system, ultimately giving the offshore world a bad reputation. This article looks at the many benefits associated with overseas banking; and how this has left the industry open to abuse.