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Free-zone companies speak out on tax proposal

October 28, 2011

Foreign companies operating in Costa Rica’s free zone launched a lobbying campaign last week against a government plan to raise taxes and add new taxes to free-zone businesses. Part of a comprehensive fiscal reform package under discussion by lawmakers, the proposal would add a 15 percent income tax to companies who set up shop in free zones after 2015, along with other measures. Members of the Costa Rican Investment Board, or CINDE, spoke out last week against the reform package, saying that new corporate taxes would drive away foreign investment.

On Monday, CINDE President José Rossi met with members of a legislative commission tasked with creating the fiscal reform package. Rossi told lawmakers that while fiscal reform is needed to attract foreign direct investment, adding new taxes to free-zone companies could drive business elsewhere. According to CINDE, the proposed new taxes could cost Costa Rica thousands of new jobs.

The fiscal reform package is the result of a deal between President Laura Chinchilla’s administration and legislators from the Citizen Action Party, or PAC. PAC lawmakers María Eugenia Venegas and Manrique Oviedo defended the plan last week by saying that Costa Rica needs stable economic and political conditions to attract investment, and fiscal reform is key to providing that stability.

On Tuesday, employees from 15 free-zone companies lobbied lawmakers, asking them to scrap the tax plan, which they said could hurt companies already established here by taxing new investments. Among the companies speaking out against the plan are Procter & Gamble, HP, Panduit, Aegis, Baxter, Intel, Dole, Bridgestone Firestone and Hospira, the daily Diario Extra reported Saturday.

Also last week, Foreign Trade Minister Anabel González met with members of CINDE. González, who opposes adding new taxes to free-zone businesses, will meet with members of the legislative commission, although a date has not yet been announced.

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