Costa Rica: Law to Strengthen Competitiveness to Promote the Attraction of Investments Outside the Greater Metropolitan Area



On May 23, 2022, the Law for the Strengthening of Territorial Competitiveness to Promote the Attraction of Investments Outside the Greater Metropolitan Area (GAM, for its acronym in Spanish) came into force.

This new law will apply to companies making new investments in the country outside the GAM, as long as the projects are new and registered under the terms regulated by the Free Trade Zone Regime Law. This new law will also apply to companies outside the GAM related to public infrastructure and investment in human capital.

Some of its benefits include:

  • Social Development and Family Welfare Law: with the reform, public and private employers will have a reduction in the employer's burden paid to the Social
  • Development and Family Allowances Fund (FODESAF, for its acronym in Spanish), in a differentiated manner according to the number of years they have been operating:
    • Year 0-5: they will pay 5% on the total wages and salaries paid monthly to their workers.
    • Year 6-7: they will pay 1%.
    • Year 8: they will pay 2%.
    • Year 9 onwards: they will pay the general amount established for all private employers (currently 5%).
  • Framework Law of the People's Savings and Community Development Bank (Banco Popular): during the first ten years of operation, companies will pay a single contribution of 0.25% per month as opposed to the 0.50% per month ordered in the first paragraph of the article. As of the eleventh year of operation, they will be subject to the regular 0.50% monthly contribution.
  • Law for the Creation of the Joint Institute of Social Assistance (IMAS, for its acronym in Spanish): the reform exempts employers operating outside of the GAM from paying the contribution corresponding to 0.5% per month of the amounts paid to the employees, during the first five years of operation and add more changes, so that it will be as follows:
    • Year 0-5: will not pay.
    • Year 6-10: will pay 0.25% of their remunerations to IMAS.
    • Year 11 onwards: will pay the general contribution applicable to all private sector employers, which is currently 0.5%.
  • Framework Law of the National Learning Institute: the payment of 1.5% over the total amount of the payrolls paid monthly by the employers is amended so that the employers identified above will pay 1% of the total amount of their monthly payroll during the first ten years of operation and, as of the eleventh year of operation, they will be subject to the general percentage applicable to all private sector employers. Likewise, this addition limits the beneficiaries of this reform to those new companies that are located in regions outside the GAM with the exception of the territories of Palmares, Sarchí, Grecia, San Ramón, and Naranjo, if they permanently generate at least 30 direct jobs or provide training programs, training or education to their employees and aspiring employees of the locations where the company is installed.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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