Challenges to Open and Operate a Business in Costa Rica
In Costa Rica one of the main challenges of opening a business is the fact that, while relevant public policy does exist, there is no specific law for entrepreneurship, nor are there spaces where the
In Costa Rica one of the main challenges of opening a business is the fact that, while relevant public policy does exist, there is no specific law for entrepreneurship, nor are there spaces where the entrepreneurial sector might participate in the shaping of public policy. Further, social security charges are considerable and it is common to have to complete extensive paperwork.
The first decision when opening a business in Costa Rica is whether it will be done individually or with partners. Once this decision is made, steps can be taken to formalize the company in the country.
Necessary steps include: ensuring the use of land, registration as a taxpayer, registration with the Costa Rican Social Security Fund, sanitary permit, sanitary registration, insurance policy, municipal patent, trademark registration, certificates and permits, bank accounts and, if necessary, registration with the SME entity.
Taxes are the means of financing public services and these payments are compulsory for both individuals and legal entities. Depending on the economic activity that entrepreneurs might undertake, they must consider the different types of taxes established in the country and determine which ones are applicable to their company. Some possible tax categories that a company might be responsible for are:
– Tax on profits.
– Value added tax.
– Tax on wages.
Formal Duties before the General Directorate of Taxation
Modify or keep the data updated.
Keep accounting records.
Issue authorized electronic vouchers.
Submit Tax Declaration.
Submit informative returns.
Make partial payments.
“Article 18 of the Labor Code establishes the presumption of the existence of an employment contract — oral or written — between the employer and the worker. The mere initiation of the labor relationship is sufficient for the presumption of the existence of an employment contract, which obliges the parties to comply with their obligations and respect the rights established by law.”
The connections established through labor are normally regulated by an employment contract, which states the rights and obligations of each party.
As you can see, businesses have specific challenges, but these challenges are not impossible to overcome, particularly if you are advised in any of these areas as it will help you to ensure the success of your business.