Costa Rica Taxes and Preferences: CIT, WHT, IVA and Free Trade Zone for Business

Costa Rica remains an attractive platform for iGaming infrastructure and service centers due to its relatively predictable tax regime and strong investment incentives. Below is a compact "map of the area" for basic taxes and benefits with a focus on the practice of 2025.

1) Corporate income tax (CIT)

The base CIT rate is 30%. For companies with small annual gross income, there are reduced progressions in net profit (several steps up to 20%) with annual revenue up to about CRC 119.629,000; above the threshold - 30%. For micro-businesses/small businesses registered with MEIC/MAG, there is an additional benefit for the first 3-6 years (0 %/25 %/50% of tax depending on the year of activity).

Territoriality + passive income. The system is based on the principle of a territorial source: income generated in Costa Rica is taxed (services, capital, rights, assets - within the country). Since 2023, an exceptional clause has been added: if a member of an international group does not fulfill the requirements for economic presence to receive passive income (dividends, interest, royalties, etc.), such income may be taxed in Costa Rica.

Municipal fees. Separately, municipal tax is possible, the rate and base depend on the municipality (more often - the percentage of sales or profit). There is no provincial income tax.

2) Deductions on payments to non-residents (WHT)

• Dividends: 5 %/15% (5% - if the recipient directly owns ≥20% of the capital of the distributing company; otherwise 15%).
• Interest and financial expenses: 5. 5 %/15% (preference 5. 5% can be applied to certain banking groups; otherwise more often 15%).
• Royalties, management/technical services: 25%.
• Other payments: 8. 5% -30% depending on category.
• Rates may be reduced under dual conventions (e.g. Germany, Spain, Mexico, UAE).

3) VAT (IVA)

Standard IVA rate - 13%; it is a tax on the sale of goods and services in Costa Rica. A number of sectors are subject to reduced rates/exemptions, but the benchmark for service companies is 13%.

4) Annual "corporate fee" under Law No. 9428

In addition to CIT, all legal entities (active and inactive) pay the annual Corporate Tax on legal entities under Law No. 9428; amounts are tied to the base salary and are indexed annually (due date - as a rule, until January 31). Non-payment threatens with penalties and restrictions in the register.

5) Free Trade Zone (FTZ)

The key investment incentive is the regime of free zones under the PROCOMER administration. It provides a large-scale package of tax exemptions and is valid for certain categories of companies (manufacturing, trading companies, strategic services, park administrators, etc.; there are exceptions for certain activities - banks/insurance, etc.).

• Exemption from income tax for fixed periods (for example, 100% for 8-12 years, then 50% for a number of years; for megaprojects - special graphs 0 %/15%). Configuration depends on company category and location (inside/outside GAM - Greater Metropolitan Area).
• Exemption from IVA, import duties, municipal taxes, real estate transfer taxes, as well as remittance tax - for long periods (often up to 10 years).
• Payment of a paraphiscal contribution (canon) according to an understandable method (for industrial ones - from the area; for service - as a% of revenue; minimum is set).

6) What it means for iGaming operators and service centers

Operating centers (development, risk analytics, support, backhoe) work in the logic of territoriality: local services are taxed in CR, and export services - according to VAT/export rules (check documentation). CIT/municipal fees apply when distributing profits; for payments abroad - see WHT.

The structuring of passive flows (interest/dividends/royalties) should take into account the 2023 exception about substance for passive income, so as not to trigger taxation in CR.

FTZ can dramatically reduce the cumulative load, but applicability to a specific model (including restrictions on activities) must be confirmed in PROCOMER and by individual agreement (Executive Agreement).

7) Quick Tax Planning Checklist

1. Check revenue threshold and eligibility for reduced CIT rates/benefits for small companies.

2. Fix the territorial source of income and compliance with substance for passive income.

3. Map WHT by dividend/interest/royalty including DTT.

4. Set up IVA (13%) and document service/exception exports.

5. Do not forget about the annual fee under Law No. 9428 and the deadline for payment.

6. Evaluate the FTZ case: category compliance, profit benefits schedule, IVA/duty/municipal and remittance tax exemptions, paraffiscal contributions.

8) Short answers (FAQ)

What is the "basic" income tax? 30% (with progression for companies with low revenue and benefits for MIPYME).

Is there VAT? Yes, an IVA of 13% is the standard rate.

Are there strong benefits? Yes: Free Trade Zone with exemptions for profit, IVA, duties, municipal and tax on transfers abroad (for periods of 8-12 years, etc., by category/location).

What about payments to non-residents? Typical: dividends 5 %/15%, interest 5. 5 %/15%, royalties/technical services 25% (see table and contracts).

Bottom line. Costa Rica's tax model combines territoriality, moderate CIT, predictable WHT, 13% IVA and a powerful FTZ tool for investment projects. For iGaming companies, this means the ability to effectively place operational functions in the country and - subject to the criteria - further reduce the load using the Free Trade Zone, complying with substance requirements and carefully designing cross-border flows.