Costa Rica* INTRODUCTIONGeneral Capital/Other major cities: San José/Limón, San Francisco, Alajuela, Liberia, Paraíso, Desamparados Area: 51,100 km2 Population: 4.134m Language: Spanish Currency: Costa Rican colón (CRC) Country telephone code: 506 National holidays (excl. weekends)**: 2nd half 2007 — Jul 25, Aug 20, Oct 15, Dec 25, 31 200�� — Jan 1, �ar 20, 21, Apr 14, �ay 1, Jul 25, Aug 1��, Sep 15, 200�� — Jan 1, �ar 20, 21, Apr 14, �ay 1, Jul 25, Aug 1��, Sep 15, Dec 25, 31 Business hours: 0��:00–12:00 & 14:00–1��:00 (�on–Fri) Banking hours: 09:00–15:00/1��:00 (public/private banks) (�on–Fri) Stock exchange: Bolsa Nacional de Valores (BNV) Leading share index: Indice Accionario de la Bolsa Nacional de Valores (IBNV) COSTA RICA ** Source: www.goodbusinessday.com.Government Legislature ♦ Democratic republic with a unicameral Legislative Assembly (Asamblea Legislativa). ♦ Legislative Assembly – 57 members directly elected by popular vote for four-year terms. ♦ The president is directly elected every four years for one term only. The next election is to be held in February 2010. Head of state and political leader ♦ Oscar Arias, president (head of state and government) since �ay ��, 2006. He is a member of the National Liberation Party (Partido Liberación Nacional − PLN).Economy 2006 2007 2001 2002 2003 2004 2005 Q2 Q3 Q4 YEAR Q1Exchange rate* (CRC per USD)** 328.87 359.82 398.66 437.94 477.79 508.99 517.05 517.99 511.30 518.68Interest rate (lending rate)** % 23.83 26.42 25.58 23.43 24.66 23.61 22.55 17.92 22.19 14.58Unemployment % 6.1 6.4 6.7 6.5 NA NA NA NA NA NAConsumer inflation*** % + 11.2 + 9.2 + 9.4 + 12.3 + 13.8 + 12.0 + 11.6 + 9.6 + 11.5 + 9.0GDP volume growth*** % + 1.1 + 2.9 + 6.4 + 4.1 + 6.0 NA NA NA NA NAGDP CRC bn 5,395 6,061 6,982 8,127 9,566 – – – NA –GDP USD m 16,403 16,844 17,514 18,557 20,02 – – – NA –GDP per capita USD 4,09 4,08 4,90 4,367 4,624 – – – NA –BoP (goods, services income) as % GDP – 4.6 – 6.1 – 6.2 – 5.4 – 6.1 – – – NA –* Market rate. ** Period average. *** Year on year. Source: International Financial Statistics, IMF, June 2007.* Please note that rules, regulations and market practice are evolving. As a result, they may diverge from the formal regulatory framework described inthis country profile and their interpretation may differ accordingly. If you are planning any business activity in the country, we would recommend thatyou seek independent advice on the latest market and regulatory developments as well as legal and tax advice.
CASH, TRADE TREASURY CENTRAL AMERICASectoral distribution of GDP (% of GDP) ♦ Agriculture ��.6% ♦ Industry 31% ♦ Services 60.4% (2006) COUNTRy CReDIT RATINg Fitch Ratings rates Costa Rica for issuer default as: Term Local currency rating Foreign currency rating Short – B Long BB + BB Long-term rating alert Outlook Stable Source: www.fitchratings.com, July 2007. LegAL AND RegULATORyCentral bank Established as a result of Law 1130 of 1950, the Central Bank of Costa Rica (Banco COSTA RICA ♦ Central de Costa Rica – BCCR) is an independent institution which operates in accordance with the Organic Law of the Central Bank of Costa Rica (LOBCCR), Law 755�� of November 27, 1995.Bank supervision ♦ The General Superintendency of Financial Entities (Superintendencia General de Entidades Financieras – SUGEF) is an autonomous entity, operating under the umbrella of the BCCR, which acts as the supervisory and regulatory authority for the financial sector in Costa Rica. However, the overall regulatory and policy framework is determined by the National Council for Financial System Supervision (CONASSIF), which coordinates the supervision of the financial sector as a whole.Resident/Non-resident ♦ A company is considered resident in Costa Rica if it is established in Costa Rica or has limited liability and is undertaking profit-making activities in Costa Rica. ♦ A branch, agency or other permanent establishment of a non-resident company will also be deemed to be resident.Bank accounts ♦ Foreign exchange accounts and domestic currency (CRC) accounts can be held by residents both domestically and abroad, and accounts in domestic currency are convertible into foreign currency. ♦ Non-resident bank accounts are permitted in Costa Rica, denominated in either domestic (CRC) or foreign currency. Non-resident accounts in domestic currency are also convertible into foreign currency.Reporting ♦ There are no central bank reporting requirements for companies. ♦ The BCCR must be notified about all loans to non-residents from resident privately owned commercial banks, finance companies and cooperatives.Exchange controls ♦ The Costa Rican colón (CRC) is Costa Rica’s official currency and is subject to a crawling peg regime. The interbank market determines the CRC’s external value. ♦ Foreign exchange is traded in the organized electronic foreign exchange market 2
CASH, TRADE TREASURY CENTRAL AMERICA (�ONED), although it can also be traded between authorized institutions outside of the �ONED. ♦ All transactions in the exchange market are subject to an exchange tax. In 2005, the average tax rate was 10%. Proceeds from this tax have to be transferred to the BCCR within one day. ♦ Costa Rica is a member of the Central American Common �arket (CAC�). ♦ Exchange controls are issued by SUGEF. ♦ Foreign currency is imported or exported without charge and usually via the BCCR. ♦ Receipts of proceeds from exports and from invisible transactions and current transfers must be reported within 90 days of the fiscal year-end. ♦ All profits, dividends, and remittances of interest abroad on payments for invisible transactions and current transfers, with the exception of remittances to foreign banks, are subject to 15% withholding tax (see Taxation). ♦ Authorization from the National Budget Authority (comprising the �inister of Finance, �inister of Planning and the President of the BCCR) is required for government loans and those from decentralized agencies and state-owned businesses.Anti-money laundering/counter-terrorist financing* ♦ Costa Rica has implemented anti-money laundering legislation (Law No. 77��6 of COSTA RICA 2001 and Law No. ��204 of 2002). Further draft legislation is under review in the Legislative Assembly. ♦ Costa Rica is a member of the Caribbean Financial Action Task Force (CFATF) and the Organization of American States/Inter-American Drug Abuse Control Commission (OAS/CICAD). ♦ Costa Rica has established a financial intelligence unit (FIU), the Centro de Inteligencia Conjunto Antidrogas/Unidad de Análisis Financiero (CICAD/UAF) and is a member of the Egmont Group. ♦ Financial institutions are required to report suspicious transactions to the CICAD/ UAF. ♦ However, current regulations only cover those entities (excluding offshore banks) which are involved in the transfer of funds as a primary business. ♦ All currency transactions exceeding USD 10,000 must be reported. ♦ All individuals carrying cash are required to declare any amount over USD 10,000 to Costa Rican officials at ports of entry. ♦ Account opening procedures require formal identification of the account holder and beneficial owners. ♦ All records must be kept for at least five years. * Supplied by BCL Burton Copeland (see www.burtoncopeland.co.uk for background explanatory article). Data as at March 2007. TAXATION†Resident/Non-resident ♦ A company is considered resident in Costa Rica if it is established in Costa Rica or has limited liability and is undertaking profit-making activities in Costa Rica. ♦ A branch, agency or other permanent establishment of a non-resident company will also be deemed to be resident.Tax year ♦ The tax year ends on September 30. ♦ Banks and other financial intermediaries can request the calendar year as their tax year. 3
CASH, TRADE TREASURY CENTRAL AMERICA ♦ Corporate income tax returns must be filed by December 15 following the tax year end, i.e. within two months and 15 days of the tax year end. ♦ In �arch, June and September companies make prepayment installments totalling 75% of the average tax paid in the previous three years. Any balance must be paid by December 15. ♦ Companies can get authorization to use a different tax year end.Corporate taxation ♦ Resident and non-resident companies are taxed on their Costa Rican income. ♦ Businesses operating in the free trade zone are tax exempt. ♦ Foreign sourced income is tax exempt and no credit is therefore given for foreign tax. ♦ The corporate income tax rates are: ♦ For gross income of less than CRC 31,043,000 10% ♦ Gross income of CRC 31,043,000 to 62,444,000 20% ♦ Gross income of more than CRC 62,444,000 30% ♦ The applicable tax rates are determined according to gross income, but are applied to net income. ♦ Tax losses can be carried forward and set against the taxable income of the following three years for industrial enterprises and five years for agricultural enterprises. The carry back of losses is not permitted. COSTA RICAAdvance tax ruling availability ♦ Costa Rican tax payers may apply for advance confirmation from the tax authorities regarding the tax consequences of entering into specific transactions.Property taxes ♦ There is a 1.5% charge on real estate transfers. There is another charge of aproximately 1.5% that corresponds to the stamps that might be paid to the National Registry of real property. ♦ There is an annual property tax of 0.25% on land, buildings and fixed equipment based upon registered value, where that value exceeds 45 times the basic wage (currently CRC 210,600).Annual business license tax ♦ Local municipalities levy an annual business license tax, which is approximately 0.1% of gross income. Capital gains tax ♦ Capital gains on depreciable assets are taxed as ordinary income. ♦ There is no capital gains tax on the sale of real estate or securities unless the gains are generated by way of a company’s normal trading activities. Withholding tax Payments to: Interest Dividends Royalties Fees Resident companies 8%* 5% Nil Nil Non-resident companies in 15% 5%/5% 25% 5%/25% non-tax-treaty country * Only paid by financial intermediaries or entities registered on a stock exchange. ♦ There is no withholding tax on interest payments to recognized financial institutions and banks. ♦ Dividends paid by companies listed on public stock exchanges are subject to a 5% withholding tax. 4
CASH, TRADE TREASURY CENTRAL AMERICA ♦ Payments to parent companies for royalties, etc. may not exceed 10% of gross sales. ♦ The withholding tax on royalties, dividends and interests paid to non-residents can be exempted if the non-resident is not able to credit such tax against the income tax levied in their home country. ♦ Undistributed profits of unlisted companies and branches of foreign companies pay 15% withholding tax on profits irrespective of whether remitted or not. Companies can avoid this by capitalizing the undistributed profits. ♦ Commercial paper and security issues are subject to an ��% withholding tax.Tax treaties ♦ Costa Rica has signed double-taxation treaties with Spain, Germany and Romania, but they have not yet come into force. Costa Rica also has an information exchange treaty enforced with the US. ♦ Costa Rica is a full member of the Central American Common �arket, which guarantees free trade among member countries.Thin capitalization ♦ There are no formal thin capitalization rules in Costa Rica.Transfer pricing ♦ There are no formal transfer pricing regulations in Costa Rica. COSTA RICA ♦ Recent rulings state that the substance-over-form principle can be used to establish transfer pricing assessments.Tax treatment of economic groups ♦ There are no provisions in Costa Rican legislation that permit two or more different legal entities to consolidate their results for tax purposes are no formal transfer pricing regulations in Costa Rica. ♦ There are also no provisions permitting the transfer of losses between companies in a group and no specific rules in relation to the tax-free transfers of assets between related companies.Stamp duty ♦ 0.2% is levied on contracts and credit agreements. Sales taxes/Excise ♦ Sales tax of 13% is levied on most goods and some services. ♦ Sales tax collected, less tax paid to suppliers, is remitted monthly. ♦ Excise taxes are charged on tobacco, alcohol and airline tickets. ♦ Credit and debit card operators have to transfer up to 6% of the sales tax to the Costa Rican Treasury on the transaction day plus one.Payroll and social security taxes/social contributions ♦ Companies must pay a Christmas bonus of one month’s salary (15 days for companies with less than CRC 300,000 net worth). ♦ The following social security contributions are required: Employer Employee Social security contributions 26% 9% Accidental insurance contributions 0.5–22% – ♦ Employers are responsible for collection of the employees’ contributions. ♦ There are no payroll taxes. ♦ NOTE: For over three years, Costa Rica’s government has been promoting a global 5
CASH, TRADE TREASURY CENTRAL AMERICA reform in its tax system. This reform would let the government change the actual system to a worldwide income regulation. † All tax information supplied by Deloitte Touche (www.deloitte.com). Data as at March 1, 2007. BANKINgMajor banks Bank Total assets (USD millions)* March 31, 2007 Banco Nacional de Costa Rica (state-owned) 4,630 Banco de Costa Rica (state-owned) 2,774 Banco Popular y de Desarrollo Comunal (special-law bank) 1,596 Banco Interfin SA 988 Banco BAC de San José (Grupo BAC/Credomatic) 993 Banco Banex SA (Grupo Banitsmo) 866 Banco Cuscatlán de Costa Rica SA (UBC International) 520 Scotiabank de Costa Rica SA (Bank of Nova Scotia Group) 396 Banco Crédito Agrícola de Cartago (state-owned) 350 COSTA RICA Banco Improsa SA 332 Banco Promérica SA (Grupo Promérica) 294 Banco Lafise SA (Grupo Lafise) 209 Banco BCT SA 136 Citibank Costa Rica SA (Citigroup) 2 Banco Hipotecario de la Vivienda (special-law bank) 04 Banco Uno (Grupo Financiero Uno) 89 Banco Cathay de Costa Rica SA 58 * CRC 518.68 per USD 1. Sources: Superintendencia General de Entidades Financieras and www.bankersalmanac.com.Overview ♦ The banking sector in Costa Rica currently consists of three state-owned commercial banks, two banks created by special law and 12 private and co-operative banks. In addition, there are nine non-banking financial entities, 28 savings and loans co- operatives, two mutual banks dedicated to providing mortgages for housing and one special financial entity (Caja de Ahorro y Prestamos de la ANDE). ♦ The majority of assets in the banking industry are concentrated among the state- owned and private banks. As of �arch 2007, the state-owned, private and special- law banks held 54%, 34% and 12% respectively of the total assets in the Costa Rican banking sector. The six largest banks currently account for approximately ��2% of total banking sector assets. ♦ The Banco Nacional de Costa Rica (BNCR) is the largest bank in Costa Rica, operating both as a commercial bank and as a development bank. ♦ Retail banking in Costa Rica is dominated by the three state-owned commercial banks – Banco Nacional de Costa Rica (BNCR), Banco de Costa Rica (BCR) and Banco Crédito Agrícola de Cartago (Bancrédito – BCAC). Nevertheless, Costa Rica’s privately owned banks offer a wide array of retail and corporate banking services. ♦ There has been a significant amount of consolidation and foreign investment within the Costa Rican banking sector since 1999. At present, two-thirds of the privately owned banks are controlled by foreign investors. They include Banco BAC de San 6
CASH, TRADE TREASURY CENTRAL AMERICA José, Banco Banex, Banco Cuscatlán de Costa Rica, Banco Lafise, Banco Uno, Banco Promérica, Citibank Costa Rica and Scotiabank de Costa Rica. ♦ In September 2006, Scotiabank completed the acquisition of 99.99% of Corporación Interfin, the parent company of Banco Interfin, for USD 294 million. Scotiabank de Costa Rica and Banco Interfim will merge in 2007 to create the largest private bank in Costa Rica. The new entity will be the country’s third largest bank in terms of assets. ♦ In 2006, HSBC acquired Corporación Banex. Corporación Banex is the parent of Banco Banex, Costa Rica’s sixth largest bank in terms of assets. PAyMeNT INSTRUMeNTSPayment statistics Millions of Traffic transactions % change (USD billions)* % change 2005 2006 2006/2005 2005 2006 2006/2005 Checks (CLC) 10.7 10.3 – 3.7 19.9 23.2 16.6 Third-party transfers (TT) 0.11 0.16 45.5 15.4 18.3 18.8 Interbank transfers (TI) 0.037 0.039 5.4 30.8 41.3 34.1 Direct credits (CCD) 5.2 6.0 15.4 3.5 4.8 37.1 COSTA RICA Direct debits (CDD) 0.016 0.023 43.8 0.64 0.84 31.3 Other negotiable instruments (COV) 0.064 0.070 9.4 1.6 1.13 – 29.4 Debit and credit cards NA NA NA NA NA NA*CRC 517.96 per USD 1. NA, not available. Source: Banco Central de Costa Rica.Cash ♦ Cash is widely used, particularly for low-value transactions. In addition to the national currency, the colón (CRC), US dollars (USD) are also in circulation and are commonly used in the tourism industry.Credit transfers ♦ Credit transfers are used for both high-value and low-value payment transactions. ♦ The Interbank Trading and Electronic Payments System (Sistema Interbancaria de Negociación y Pagos Electrónicos – SINPE) was developed by the Banco Central – SINPE) was developed by the Banco Central de Costa Rica. It comprises Costa Rica’s various electronic payment services as well as the electronic check clearinghouse. All transactions processed via SINPE systems are settled through reserve accounts that participants maintain at the BCCR. ♦ High-value, same-day payment transactions that are typically processed through Costa Rica’s real-time gross settlement system are called Electronic Funds Transfers (Transferencias Electrónicas de Fondos – TEF). There are two TEF transfer types. The TI service (Transferencias Interbancarias – TI), introduced in �arch 1999, is used for interbank funds transfers. The TT service (Transferencias a Terceros – TT), introduced in �arch 2000, is used for third-party funds transfers. ♦ The number of TT (third-party) interbank transfers increased from 31,400 in 2001 to 164,390 in 2006. For the same period, the number of TI (interbank transfers) remained relatively flat and was 38,810 for 2006. ♦ Low-value electronic credit transfers are batched and processed through the Direct Credits Clearing Service (Creditos Directos – CCD), which was introduced in �ay 2001. Low-value electronic credit transfers mainly include payroll and supplier payments. Funds are available to the beneficiary on T+1. Almost all credit transfers are denominated in CRC. The �inistry of Finance makes most of the central government’s payments to government employees and suppliers via direct credits. 7
CASH, TRADE TREASURY CENTRAL AMERICA ♦ The volume of interbank direct credits increased from 2.43 million in 2001 to 6.03 million in 2006, while the value of direct credits increased from USD 452 million to USD 4.�� billion during the same period. Direct debits ♦ Direct debits may be used for one-time or recurring payments provided there is a signed authorization in place. They are used mainly for utility, tax and other consumer bill collections. ♦ Interbank direct debits are batched and processed through the Direct Debits Clearing Service (Débitos Directos – CDD), which was introduced in December 2001. Funds from direct debits are available to the beneficiary on T+1. Before the introduction of the direct debit service in December 2001, direct debits were only possible if the originator and receiver had accounts in the same bank. This service is being actively used by the �inistry of Finance to collect taxes ♦ The �inistry of Finance also uses a similar direct debit service called DTR (real- time debits) to collect customs taxes. Customs transactions are confirmed in real time on T+0 and settlement via direct debit takes place on T+1.Checks ♦ Checks are used frequently by both businesses and individuals and can be denominated in USD and CRC. All checks in Costa Rica are cleared electronically through the Clearinghouse for COSTA RICA ♦ Checks and Other Negotiable Documents (Cámara de Compensación y Liquidación de Cheques y Otros Valores), which was introduced in April 1997. Funds are available to beneficiaries on T+1. ♦ While the regulations in Costa Rica permit the truncation of checks by the bank of deposit, checks are still physically exchanged by the banks. ♦ As a result of the introduction of the new electronic funds transfer systems by the BCCR, which began in the late 1990s, the number of checks processed by the check clearinghouse in Costa Rica has decreased by 15% from 12.1 million in 2001 to 10.3 million in 2006. ♦ Checks denominated in CRC represented 90% of the total check volume and 64% of the total check value processed by the check clearinghouse in 2005 and 60.9% of the total check value processed in 2006. Card payments ♦ Debit cards are widely used in Costa Rica. ♦ �any of the major banks, including the three state-owned banks, have their own proprietary AT� networks, although in 2005 Banco Nacional de Costa Rica and Banco Popular joined their AT� networks together. �ost banks are also members of the shared AT� network ATH (A Toda Hora). The AT� network Red Total belongs to Grupo BAC, which owns Banco BAC de San José. ♦ Most credit cards are issued by banks and other financial service providers under agreements with Visa and �asterCard. Other card issuers include Diners Club and American Express. ♦ Some banks have launched a dual-use card (debit and credit) that facilitates electronic payments via the Internet. Payment can be made in CRC as well as USD. ♦ Prepaid cards are issued by telephone companies and are widely used. 8
CASH, TRADE TREASURY CENTRAL AMERICA PAyMeNT SySTeMSType ♦ The Sistema Interbancario de Negociación y Pagos Electrónicos (SINPE) was developed by the BCCR as the platform for the different interbank payment and settlement systems operated by the BCCR. The following low-value and high-value electronic transfer and clearing systems were developed and introduced by SINPE during the past nine years. ♦ The Electronic Funds Transfer System (Transferencia Electrónica de Fondos – TEF) is a real-time gross settlement system (RTGS). The TEF is used for interbank funds transfers (Transferencias Interbancarias – TI) as well as third-party funds transfers (Transferencias a Terceros – TT). Both are executed and settled on a quasi-real-time basis. Receiving entities have one hour to accept or repudiate transfers. Settlement in participants’ accounts is immediate and final once the receiving entity accepts the transfer. There are no amount restrictions for TEF transactions. There is no queuing mechanism, and transactions that are rejected because of lack of funds must be re-submitted. Settlement of all TEFs takes place in participants’ accounts at the BCCR. ♦ The Direct Credits (Créditos Directos) and Direct Debits (Débitos Directos) Clearing Services (CCD and CDD) are used to send interbank electronic credits and debits. COSTA RICA There are no restrictions with respect to minimum or maximum amounts. Transactions are submitted in batches and settled on a multilateral net basis. Settlement of direct credits and direct debits take place in participants’ accounts in the BCCR. Funds are available to the beneficiary on T+1. ♦ The Clearing House for Checks and Other Negotiable Documents (Cámara de Compensación y Liquidación de Cheques y Otros Valores) is a nationwide, automated clearing and settlement system. It consists of two sub-systems: ♦ The Check Clearing and Settlement system (Compensación y Liquidación de Cheques – CLC) is the clearing and settlement service for checks denominated in CRC and USD. CLC operates on a multilateral net deferred settlement basis. Checks are cleared electronically and physically exchanged in a centralized clearinghouse facility. Funds are available to the beneficiary on T+1. ♦ The Clearing and Settlement of Other Negotiable Documents (Compensación y Liquidación de Otros Valores – COV) is the clearing and settlement service for other paper-based negotiable documents denominated in CRC and USD. The documents are cleared electronically and are physically exchanged. Funds are available to the beneficiary on T+1. ♦ The Tax Information and Settlement system (Información y Liquidación de Impuestos – ILI) is an automated collection system which electronically processes tax payments that are received by financial institutions on behalf of the central government. Tax payments collected via financial institutions are automatically credited to the Ministry of Finance on T+1. The details of the tax payments are transmitted electronically through SINPE.Participants ♦ As of May 2007, there were 56 participants in SINPE including the financial institutions, �inistry of Finance, Social Security Institute and National Insurance Institute. All entities are required to hold a reserve account with the BCCR in CRC and USD for clearing and settlement purposes. Reserve accounts cannot be overdrawn, and (intraday) liquidity is only available through overnight repos with the BCCR or through the open, interbank liquidity market. ♦ All deposit-taking financial institutions participate in the Clearinghouses for Checks and Other Negotiable Documents. 9
CASH, TRADE TREASURY CENTRAL AMERICA ♦ Participation in the CCD and CDD systems is voluntary, but participants must hold a reserve account with the BCCR to accommodate automated settlement. ♦ Financial institutions that are authorized by the �inistry of Finance to act as tax collectors for the Government participate in the ILI system.Transaction types processed ♦ The Clearing House for Checks and Other Negotiable Documents processes checks and other types of paper-based documents. Other documents can include commercial bills (letras), promissory notes or certificates of other negotiable instruments. ♦ The CCD and CDD systems process interbank credit transfers such as payroll and supplier payments, as well as interbank direct debit transactions such as payment of utility and other consumer bill payments. Both systems are used extensively by the �inistry of Finance for tax collection and to pay government employees and suppliers. ♦ The ILI system processes all types of Central Government tax collections. ♦ The high-value electronic funds transfer system (TEF) processes interbank funds transfers (TIs) related to the money, capital and foreign exchange markets. It also processes third-party funds transfers (TTs) on behalf of participants’ clients.Operating hours ♦ The CLC and COV operate from 17:00 to 23:30. The CCD and CDD services operate throughout the day. Participating banks must COSTA RICA ♦ observe the specific input deadlines established by SINPE. ♦ The ILI service operates from 0��:00 to 14:30. ♦ The TEF service operates from 0��:30 to 17:00.Clearing cycle details CLC and COV (checks and other negotiable documents) ♦ 08:00–17:00 T+0: Checks are deposited at banks by clients. ♦ 17:00–23:15 T+0: Banks transmit check presentments to BCCR via SINPE. ♦ 23:30 T+0: Physical exchange of checks. ♦ 09:00–11:00: T+1 Banks transmit return items to BCCR via SINPE. ♦ 11:30 T+1: Physical exchange of return items from T+0. ♦ 12:00 T+1: Settlement of multilateral net positions in participants’ accounts at the BCCR. ♦ 14:00 T+1: Funds are available to beneficiaries. CCD and CDD (direct credits and direct debits) ♦ 08:00–24:00 T+0: Banks transmit electronic files to SINPE with electronic credit and debit instructions. ♦ 24:00–08:30 T+1: Banks transmit electronic files to SINPE with return item information. ♦ 08:30–10:00 T+1: Settlement of multilateral net positions in participants’ account at the BCCR. ♦ 10:00 T+1: Funds are available to beneficiaries. ILI (electronic government tax collections) ♦ 08:00–13:00 T+0: Tax payments are made at banks by companies and individuals. ♦ 08:00–14:00 T+1: Banks transmit electronic files to SINPE with tax collection information segregating information by type of tax collected. ♦ 14:00 T+1: Settlement of gross positions in participants’ accounts at the BCCR and credit to the central government accounts at the BCCR. TEF (same-day electronic funds transfers) ♦ 0��:30–17:00: Sending of interbank and third party electronic transfer instructions. ♦ Within one hour of receipt: acceptance or rejection (repudiation) of the transfer; in the case of acceptance, this is followed by immediate settlement by crediting the 0
CASH, TRADE TREASURY CENTRAL AMERICA receiving financial institution’s reserve account at the BCCR. In the case of third- party transfers, the receiving financial institution credits the final beneficiary account within one hour of receiving the funds. CASH MANAgeMeNTDomestic Notional pooling ♦ Notional pooling is not permitted in Costa Rica. Cash concentration ♦ Companies operating in Costa Rica frequently maintain an account in CRC and an account in USD. ♦ Zero balance accounts are offered by some banks. Accounts must be in the same currency. Collections ♦ Because the mail system in Costa Rica is not used for sending payments, many customers make their payments directly at a bank branch. The use of special deposit tickets (boletas de deposito) or customer codes allows the bank to capture remittance information about the payment at the time it is made. Remittance information is provided to the collecting company via electronic banking, file transfer or report. Some banks provide online payment and remittance information. COSTA RICA ♦ Companies that receive payments at their offices may use an armored car service (servicio de blindados o transporte de valores), which is typically contracted through a bank. The armored car service travels to the company’s offices on a specified schedule to pick up cash and/or checks and then makes deposits at a designated bank branch. ♦ Cobradores (private couriers or collection services) and/or sales persons are frequently used by companies to facilitate collections by delivering invoices and picking up payments from their customers. Short-term investments ♦ Companies use a variety of instruments for short-term investments, including: ♦ time deposits (depositos a plazo fijo) ♦ certificates of deposit (certificados de depósito) ♦ treasury bills (BE�s) ♦ repurchase agreements (repos).Cross-border ♦ Cross-border payments are routed via SWIFT and settled through accounts held with correspondent banks abroad. eLeCTRONIC BANKINg ♦ Electronic banking is used by companies in Costa Rica. ♦ �ajor banks in Costa Rica offer Internet-based electronic banking systems with account information and funds transfer capabilities. ♦ During the past few years, Costa Rica’s banks have invested heavily in electronic banking and online services and offer an array of services via their financial portals. ♦ Use of Internet services is growing in Costa Rica, and the number of users at �arch 2007 was estimated to be around 922,500 (or 20.5% of the country’s population). Consumers with Internet access are using financial portals for account inquiries and to review and pay their utility, tax and other consumer bills. ♦ Costa Rica’s Law 14.276 (Ley de Firmas y Documentos Electrónicos) addresses electronic documents and signatures.
CASH, TRADE TREASURY CENTRAL AMERICA ♦ Costa Rica’s BCCR and SINPE require that all financial institutions use a standardized bank account code called the Client Account (Cuenta Cliente – CC). The CC is a 17-digit identification code assigned by all financial institutions to each checking and savings account (in both CRC and USD) of their clients. The CC consists of the BCCR bank code, the bank branch, checking or savings account and currency indicators, the client name and a check digit. The CC ensures that all payment and collection transactions, including checks and electronic transfers, can be executed rapidly and accurately. TRADeTrading partners Import ♦ USA 41.3%, Japan 5.6%, Venezuela 4.��%, �exico 4.��%, Ireland 4.3%, Brazil 4.2%, China 4.2%. Export ♦ USA 42.6%, Hong Kong 6.9%, Netherlands 6.4%, Guatemala 4.2%. Imports Documents ♦ In order to import goods into Costa Rica, a commercial invoice (one original and COSTA RICA two copies in Spanish) is required, which must include a full description of the imported goods. Importers are also obliged to provide a bill of lading (one original and two copies) and a pro-forma invoice. ♦ A packing list is also recommended. ♦ All animals or animal products require three copies of a health certificate. ♦ For imports of flour, lard and seeds a certificate of analysis (three copies) is mandatory. Licenses ♦ Licenses are not necessary for the majority of imports. ♦ Licenses are required when importing certain alcoholic beverages, armaments, certain drugs, pesticides and fertilizers. ♦ An import permit and subsequent registration with the �inistry of Health is required for certain plants, foods, cosmetics, pharmaceutical and chemical products. Taxes/Tariffs and other fees ♦ The majority of imports are subject to a customs tariff of ranging from zero to 15%. ♦ A sales tax (IGV) of 13% is also levied on imports with the exception of various essential items (see Taxation). ♦ Selective consumption taxes (ISC) may also be levied on luxury items (such as motor vehicles), with rates ranging from zero to 100%. ♦ A free trade zone has been established by Costa Rica with its fellow CAC� (Central American Common �arket) member countries – El Salvador, Guatemala, Honduras and Nicaragua. ♦ Costa Rica has also established free trade agreements with CARICO� (the Caribbean Community and Common �arket), Canada, Chile, the Dominican Republic, �exico and Panama. ♦ In 2005, Costa Rica signed the US-Dominican Republic-Central America Free Trade Agreement (DR-CAFTA). Other signatories included Guatemala, El Salvador, Honduras and Nicaragua. Prohibited imports ♦ A negative list (list of products that may not be imported) is in operation. It is prohibited to import certain commodities into Costa Rica in order to protect public health, national security, and for hygienic and moral reasons. 2
CASH, TRADE TREASURY CENTRAL AMERICAExports Documents ♦ An export form is required when exporting goods from Costa Rica. Licenses ♦ Licenses are needed for exporting an extensive list of various types of goods. Taxes/Tariffs and other fees ♦ Export taxes are levied on coffee (20% of coffee exports are kept by the government) and bananas, and in certain cases are graduated to correspond with international prices. ♦ Certain agricultural products are subject to minor tariffs. ♦ No taxes exist for non-traditional exports to countries outside Central America. Prohibited exports ♦ There is no published negative list of products that cannot be exported. ♦ Quota restrictions on exports of textiles to the USA were eliminatated in 2005. Since January 2006, the EU tariff only system applies to Costa Rican banana exports.Financing imports and exports Imports ♦ There are no financing requirements for imports. Exports ♦ There are no financing requirements for exports. COSTA RICA gLOSSARyBanco Central de Costa Rica (BCCR) – Costa Rica’s central bank.Cámara de Compensación y Liquidación de Cheques y Otros Valores – The Clearinghouse for Checks and Other Negotiable Documents is a nationwide, automated clearing and settlement system. It consists of two sub-systems, the CLC and COV.CCD (Compensación de Créditos Directos) and CDD (Compensación de Débitos Directos) – The Direct Credits and Direct Debits Clearing Services are used to process interbank electronic credits and debits respectively.CLC (Compensación y Liquidación de Cheques) – The Check Clearing and Settlement system is the clearing and settlement service for checks denominated in CRC and USD. CLC operates on a multilateral net deferred settlement basis.COV (Compensación y Liquidación de Otros Valores) – The Clearing and Settlement of Other Negotiable Documents system is the clearing and settlement service for other paper-based negotiable documents denominated in CRC and USD.CRC (Costa Rican colón) – Costa Rica’s official currency.ILI (Información y Liquidación de Impuestos) – The Tax Information and Settlement system is an automated collection system which electronically processes tax payments that are received by financial institutions on behalf of the central government.SINPE (Sistema Interbancario de Negociación y Pagos Electrónicos) – The Interbank Trading and Electronic Payments System. SINPE was developed by the BCCR as a common platform for Costa Rica’s different interbank payment and settlement systems. It comprises Costa Rica’s various electronic payment services as well as the electronic check clearinghouse.SUGEF (Superintendencia General de Entidades Financieras) – The General Superintendency of Financial Entities. An autonomous entity, operating under the umbrella of the BCCR, which acts as the supervisory and regulatory authority for the financial sector in Costa Rica.TEF (Transferencias Electronicas de Fondos) – The Electronic Funds Transfer System is Costa Rica’s real- time gross settlement (RTGS) system, used for interbank funds transfers (Transferencias Interbancarias – TI) as well as third-party funds transfers (Transferencias a Terceros – TT). 3
CASH, TRADE TREASURY CENTRAL AMERICA USeFUL CONTACTS Central Bank of Costa Rica (Banco Central de Costa Rica) www.bccr.fi.cr General Superintendency of Financial Entities www.sugef.fi.cr Leading banks: Banco Nacional de Costa Rica www.bncr.fi.cr Banco de Costa Rica www.bcr.fi.cr Banco Popular y de Desarrollo Comunal www.bancopopular.fi.cr Costa Rican Banking Association www.abc.fi.cr �inistry of Economy, Industry and Commerce www.meic.go.cr �inistry of External Commerce www.comex.go.cr �inistry of Finance www.hacienda.go.cr Chamber of Commerce of Costa Rica www.camara-comercio.com Chamber of Industry of Costa Rica www.cicr.com Costa Rican Export Promotion Agency www.procomer.com Costa Rican Investment Board (CINDE) www.cinde.or.cr Bolsa Nacional de Valores (BNV) www.bnv.co.cr HSBC CONTACT DeTAILS �s. �aritza Chong Senior Vice-president, CIB/C�B �anager COSTA RICA Tel: +507 210 7633 E-mail: firstname.lastname@example.org 4