Jatropha Seedlings growing in NatureWalk, Nursery

Costa Rica - The Best Country Brand in Latin America

By Boomers Abroad

for natural beauty, welcoming nature, devotion to peace, democracy, authenticity, quality of life……

Future Brand, a British company, publishes the The Country Brand Index on an annual basis, and uses its own methodology to determine the value of many countries as a brand. The values are based on a wide number of factors including natural features, culture, business environment, quality of life of its residents, and others The current index was published on November 12th 2011.

This past year, Costa Rica improved in the world rankings, to 24th best overall. This placed it highest of all Latin American countries on the global list. Best known for its "No Artificial Ingredients" campaign, Costa Rica has had a national priority to promote the country's image as a protector of its natural wealth.

Costa Rica’s tourism brand is ranked above that of countries such as Brazil, Argentina, and Chile. The report states, "A strong country brand is more than the sum of its attributes; it must make people's lives better from the progressive policies, to freedom of expression and openness. It must call people around the world to visit that country, to do business, and make a living there.”

To provide the basis for the study’s conclusions over 3500 interviews were conducted between July and September, 2011, involving tourists from more than 14 regions of the world. The study has published the country brand evaluations since 2004. Globally, Costa Rica is ranked 24th, out of 113 surveyed countries. In Latin America, it is followed by Brazil (31st), Argentina (32nd), Chile (34th), Peru (44th), Mexico (47th) and Uruguay (50th).

The full analysis and a downloadable pdf is available at Future Brand

The full story is available at Boomers Abroad

Investing in Costa Rica - Including recommended projects

By the Costa Rica News

1. A country open to foreign investment

It is known that the promotion and creation of ideal conditions for foreign investment is essential for the stimulation of exports. This also allows new technologies and creates employment. The Costa Rican government and its laws encourage direct foreign investment. This attitude is shared by the two major political parties and has been implemented actively since the early eighties. Also, the improvement of conditions destined to attract foreign companies has been the trademark for the past 15 years.

To support this effort, CINDE (Costa Rican Investment and Trade Development Board), a private non-profit organization, was set up to assist and guide investors and companies in the set up for operations in Costa Rica.

A further step on this effort was the promulgation of legislation providing significant tax and operational incentives to companies in export related activities. These sets of incentives are: the export contract, the free zone and the temporary admission system, all of which include total or partial tax exemptions and expedite customs clearance services among other simplified operational aspects.

Costa Rican laws, regulations and practices foster competition and do not discriminate between locals and foreigners, for the conduction of business. The only exceptions to this are the entities that are constitutionally precluded from total foreign ownership such as telecommunications, energy generation and insurance. Tax, labor, health and safety laws do not inhibit the flow of investment.

2. Political features

Costa Rica is the oldest and most established democracy in Latin America. Historically, the country’s political system and social structure have contrasted sharply with those of its neighboring nations. Costa Rica has managed to develop and maintain democratic institutions in an orderly and constitutional scheme, which has been conducive to government succession.

The armed forces were abolished in 1949, and the resources once consumed by the military have since been used to promote education and provide free access to health services. This is one of many reasons why Costa Rica tends to show better standard and quality of living indicators than most other countries in Latin America.

The country’s political system is based on a structure of real checks and balances between the different administrative powers, and operates under a presidential system similar to that of the United States.

3. Economic situation overview

In terms of economic performance, although Costa Rica’s GDP grew 7.0% during 1996 (current dollars), it still fell short of the country’s goals. Strict economic policies have been established in an attempt to further stimulate the country’s growth and reduce public spending and public deficit. These include significant restructuring and downsizing of Government apparatus. During the first trimester of 1997, tax recollection increased a 12.88% in real terms, compared to the first trimester of 1996, while the increase in government expenses was 8,28% in real terms, compared to the same period in 1996. These figures show favorable trend in deficit reduction.

Recent administrations have been enacting policies to liberalize, modernize, and diversify the economy and financial sector. The country is seeing the results of diversification in the rapid development of non-traditional exports and services.

Costa Rica has lowered its external tariffs in the last years, reaching a present range between 0% and 19% for most imported products (May 1997).

The government is currently deregulating the banking system, which has been controlled by the state since 1949. In October 1992, private banks were allowed to receive short-term deposits and in 1996, to have access to checking and saving accounts.

At present the Government of Costa Rica still owns or controls some industries and services such as petroleum refining (RECOPE), telecommunications I.C.E.-RACSA and insurance (I.N.S.). However, various efforts, including a “State Reform” project currently being executed, are being made to cut back government expenses. The government’s size is being reduced by privatizing state-owned services, transferring labor from the public to the private sector, and the previously mentioned initiative of allowing private banks to have access to both current and saving accounts. Significant tax and constitutional reforms have also being established.

In 1990 for example, the National Electricity Board (ICE) approved the co-generation of electricity by the private sector, providing a clear example of downsizing efforts. Recent reforms allow for an even larger participation of private companies, the ultimate goal being a reduction in the costs of these utilities.

A series of stabilization measures initiated in March of 1995, are beginning to have an effect on Costa Rica’s economic environment as export activity continues to show a healthy and sustained growth (growth in 1996 was 7.6%). Traditionally an agricultural country, industrial output has progressively become one of the major contributors to the productive structure and GDP components, and tourism, one of the country’s main revenue generators, particularly since the late eighties, when the country started being known internationally as attractive tourist destination.

Economic indicators demonstrate the results of recent reforms. For example, although the unemployment rate rose 4.2% in 1994 to 5.3% in 1995 and to 6.2% in 1996, and real wages suffered a 1.8% reduction, the GDP per capita remained almost the same (0.3% reduction in 1996) and is expected to start growing again shortly. New tax collection procedures and the tendency of passive interest rates to steadily decline, indicates that economic activity will reactivate significantly during the rest of 1997.

During the 1995 the Central Government’s deficit represented 4.5% of the GDP and it rose to 4.8% in 1996. These figures are higher than the goals established by the I.M.F of 4.1% in 1995 and 0.5% in 1996. Expert estimates for 1997 consider a 3.7% deficit will be the figure by the end of 1997. The accumulated deficit at the end of the first trimester of 1997 was US$73.7 millions, 6.3% lower than for the same period of 1996.

The expected lower fiscal deficit, lower interest rates and the contraction of the aggregate demand, reduced pressure on price levels. In 1996, inflation was down to 13.9%, from 22.6% in 1995. Lowers levels of inflation have allowed the Central Bank to decline the devaluation rate. By the end of 1996, the devaluation was 12.8%, down from 18.0% for 1995.

4. Foreign Trade

Costa Rica’s productive structure has changed dramatically in the past 15 years. The country is

seeing the results of the diversification in the high growth of non-traditional exports and services. This change was fostered by policies geared towards the attraction of direct foreign investment in manufacturing sectors. The traditional exports (coffee, bananas, meat and sugar) dropped to 24.2% of foreign exchange generating activities during 1996, after representing over 80% just 15 years ago. Non-traditional exports, which include products as palm hearts, fruit pulp, pineapple, melon and cut flowers are today’s leaders, accounting for 60.7% of 1996 foreign exchange generating activities. Tourism also plays a major role generating foreign exchange, though it dropped from 16% in 1995, to 15% in 1996.

The variety and value of exports has been steadily increasing, and a 7.6% increase on total exports was observed in 1996. This makes Costa Rica not only the leading exporter in Central America, but also the second largest per capita exporter in Latin America after Chile. This is especially impressive when considering that the country has one of the smallest populations in the region.

Costa Rica’s accession to the GATT (General Agreement on Tariffs and Trade) in 1990, was agreed in order to implement a more stable unified tariff and tax system. Also, import duties have been reduced from the Central American maximum tariff.

Market accessibility from Costa Rica also contributes to the benefits of the investment climate. For instance, Costa Rica is Caribbean Basin Initiative (CBI) beneficiary. This implies that Costa Rican exports have duty free access to the United States (exceptions being apparel, tuna and some leather products). As of January 1995, a full encompassing Free Trade Agreement with Mexico came into effect. This agreement stipulates that existing tariffs and quotas on more than 8000 products will be phased out in the following 10 years (depending on the product).

As a member of the Central American Common Market, Costa Rican products enter El Salvador, Guatemala, Honduras and Nicaragua completely or partially duty free. Costa Rica has also signed a Tax Information Exchange Agreement (TIEA) with the United States.

5. Right private ownership and establishing operations

Aside from the services that have been stipulated to be managed by the government, or that require citizenship or residency, (full ownership of mass media for example), all private entities and individuals, regardless of their citizenship, may establish an own business enterprises. Foreign companies or investors can set up branches, joint ventures, or wholly-owned subsidiaries. Individuals or foreign partnerships can operate as stock or charter corporations. Foreigners can be officers, directors, partners or trustees of companies and can negotiate commercial documents in order to carry on with contracts and legal actions as locals.

The stock corporation (Sociedad Anonima) is the most commonly used form of association, both by local and foreign investors.

The exceptions for total foreign ownership occur in sectors that have been traditionally reserved for the government, such as insurance, telecommunications and oil refining. However, in some of these instances, the private sector may participate as a concessionaire by providing re-insurance services to the state monopoly. These limitations or restrictions apply to local as well as foreign companies or individuals.

During recent years, formerly state-owned companies have been sold to the private sector (food retailing, sugar production, aluminum processing). Also, in 1992 a “Low for Public Work Concession”, was enacted, in order to allow to the private sector to participate, through a public bid process, in areas previously reserved for the government. This low will enable an efficient service in those in which public entities do not complete adequately.

6. Capital or funds repatriation and transfer policies

There are no limitations to transfer capital or funds associated with an investment, regardless of the currency. Exchange controls were revoked in 1992, and the management of foreign currencies became entirely independent, therefore, no restrictions are imposed on re-investments or on repatriation of earnings, royalties or capital. However, taxes are sometimes collected. In addition, there is no requirement to register investments with any of the government authorities.

Under the Free Zone System for example, capital or profit repatriation is tax-exempt.

7. Incentives for foreign investment

There are no performance requirements or minimum investment levels for foreign investors.

Investments incentives are available for the activities that are directly related to the exportation of services and/or products from Costa Rica. These incentives are: the free zone system and the temporary admission system, each one regulated by its own particular legislation.

The free zone system (export processing zones) was created by law in 1981 and was managed by government entities until 1986. Ever since, it was determined that the State should divest itself from the ownership and management of the industrial parks. Private developers were encouraged to establish parks throughout the country. Currently there are eight “free zones” or industrial parks in operation.

This system grants beneficiary companies with the widest range of benefits currently available in Costa Rica. Among the fiscal benefits granted under the provisions of the free zone legislation are:

• exemption from import duties on raw materials, parts and components;
• exemption from taxes on profits for determined periods of time;
• exemption from taxes on remittances abroad;
• exemption from export taxes;
• exemption from sales tax on local purchases of goods and services.

Operational incentives such as on-site and expedite customs clearance and in some cases subsidized training are also available.

The export contract was also set up at the beginning of the eighties, granting some tax exemptions, tax rebates and credits in proportion to the amounts exported. Because of the requirement to comply with GATT (of which Costa Rica is a signatory) guidelines, this system expired in 1996, and the subsequent contracts granted only provide companies limited fiscal benefits.

The temporary admission system was set up specifically for drawback type operations. Companies can import processed raw materials into Costa Rica free of duties in order to have been used mainly by local contractors, however, foreign companies (mostly apparel manufacturers) have also taken advantage of it. Even though the flexibility and the scope of the fiscal is quite limited in comparison to the free zone system.

Some fiscal incentives are still available for tourism related investments. However, it is expected that the remaining benefits will be eliminated throughout 1996.

8. Capital markets and portfolio investment

The three state-owned banks (Banco de Costa Rica, Banco Nacional and Banco Credito Agricola) used to supply about 80% of the credit. As of 1996, there will exist a monopoly on demand savings and checking accounts. Private banks have a larger participation due to their expansion and can now offer service nationwide.

Long term capital is scarce due to variations in the inflation rate and a small domestic capital market.

There is an active stock exchange, the largest in Central America although small with regards to international standards. It is seldom used to raise capital, however, projects in the tourism industry have used it as a source of capital. Shares, bonds, promissory notes and securities, among others, are exchange every day in primary and secondary markets.

Foreign investors can borrow in the local market, but the cost is very high due to macroeconomic policy. It is advised to bring funds from abroad. As mentioned before, there are no limitations on capital or exportation regardless of the citizenship or company.

9. Direct foreign investment

Due to the fact of registry of foreign capital is not required, there are no statistics on annual amounts of foreign investment or its origin. Several hundred American, European and Asian companies have manufacturing facilities, distribution centers or offices in Costa Rica.

These organizations either service the country and the region or export to their country of origin. Foreign investment has grown considerably in recent years, particularly in tourism related and industrial activities because of the favorable operational environment the country has to offer.

From Costa Rica Investment Board

Projects that are Recommended by The Costa Rica News

1. Columbus Heights – Residential Development Playa Hermosa

2. Multi-Purpose Real Estate – Biofuel Farms Backed by Real Estate Title

3. Los Delfines – Tambor Residential Development

To read the full article visit the Costa Rica News

Road Improvements Continue to NatureWalk

The local municipality is continuing with road access improvement to NatureWalk and the pictures below show the road to the lower area of NatureWalk 2 being upgraded:

Preparation for Planting in NatureWalk 2

The land had begun preparation for the planting of Jatropha and Macauba in NatureWalk 2. Lots are being cleared and will be planted over the coming weeks with seedlings grown in the nursery.

Tax affairs in Costa Rica

Individual Income Tax

General Provisions

Under the Costa Rica tax system, residents and corporations are taxed only income earned in Costa Rica.

The tax year begins in October 1 and ends September 30, both for individuals and corporations. Companies may request filing returns on a different tax year, subject to the approval of the Ministry of Finance.

Unless proof to the contrary exists, for certain professionals as well as corporations, presumptive net income is established by the Ministry of Finance, and constitutes a minimum taxable base.

Tax & Tax Adjustment Laws

On September 1995 a main set of reforms to the prevailing tax structure was issued.

These are the tax law (Ley de Justicia Tributaria) and Tax Adjustment Law (Ley de Ajuste Tributario).

Both these Laws impose severe administrative fines, administrative penalties and criminal prosecution for failing to comply with the income reporting requirements established by law.

Income Tax

Applied to individuals as well as legal entities, i.e., corporations for income originated from a Costa Rican source.

Costa Rican Laws do not tax income derived from a foreign source.

According to the Law all of the following are subject to income taxation:

• Legal entities, the facto corporation, professional companies, and state enterprises which operate in the country;
• Branch offices, subsidiaries, or agencies of any non-resident which operates in the country;
• Trusts;
• Inheritances (as long as remaining indivisible);
• Individuals residing in Costa Rica regardless of nationality;
• Individuals hired in a professional occupation;
• Physical and legal entities not specifically mentioned and engaged in profit making activities in Costa Rica.

Entities Exempt From Income Taxation

The following are tax exempt:

• Government, local governments and autonomous and semi-autonomous organizations excluded by specific laws;
• Religious institutions regardless of creed;
• Associations, foundations, chambers, unions, political parties and other non-profit organizations;
• Employer -Sponsored Workers Associations (Asociaciones Solidaristas);
• Worker’s Cooperatives;
• Companies under Free Zone status.

Taxable Incomes

Taxable income is based upon net income, thus becoming necessary to establish the corresponding gross income of the tax paying entity.

Costa Rican Laws defines gross income as the total income and profits earned in the country during the taxable year.

This includes earnings from real property, investment of capital and other business activities.

It also contemplates any increase in net worth during the taxable year, which cannot be justified by declared or registered income.

Excluded from the gross income are the following:

• Donations in cash or kind;
• Revaluation of fixed assets (except depreciable fixed assets, though, depreciation allowances may be considered if approved by the tax administration);
• Profits, dividends, participation and any other form of distribution of benefits credited to the taxpayer;
• Income derived as a result of contracts or agreements made on goods or capital located abroad, even for contracts negotiated in C.R.;
• Capital gains obtained form the transfer of real or personal property so long as this income does not constitute a habitual transaction;
• Inheritances, legacies, community properties;
• Prizes from national lotteries;
• Approved charitable donations.

Deductions

Deductions may be subtracted from the gross income.

To be allowable deductions the taxpayer must prove that they were necessary to produce taxable income.

The following are deductible from income:

Costs: Any costs incurred, which are necessary to produce the income, may be deducted (i.e. raw materials, parts, components, or services needed to produce the goods or services);

Salaries: Wages, bonuses, gifts, benefits actually paid out are deductible as long as the income tax of the recipient has been withheld and paid to the Treasury;

Taxes: Any taxes levied against the goods or services or transactions carried out in the ordinary course of business;

Insurance Premiums: Insurance Premiums for policies, which cover fire, theft, earthquake, or similar risks;

Interest: No reduction allowed for interest payable to shareholders of limited liability companies;

Bad Debts: If related to the transactions in the ordinary course of business of the taxpayer and all legal efforts have been exhausted to collect the debt;

Depreciation: Apply to the exhaustion, wear and tear, or obsolescence of property, which is used in the trade or business. The Tax Law specifies the maximum depreciation amounts allowed;

Business Losses: Deductions are allowed for business losses. Losses incurred in one taxable year may be carried over for 3 years (5 years for agricultural enterprises);

Social Security Contributions: Contributions established by law and paid to the employees are deductible;

Board of Directors’ Remuneration: Deductions are allowed for remuneration, wages, commissions, honoraria, paid to members of the board of directors located abroad;

Payments to entities not domiciled in C.R.: Payments for technical support, financial, as well as for the use of patents, trademarks, franchise fees, or royalties are deductible. If payments are made to an agent or subsidiary of a firm which is permanently established in C.R. then the deduction cannot exceed 10% of the annual gross sales of that company;

Travel Expenses: These may not exceed 1% of the gross income declared;

Start up Expenses: Deductions are allowed for expenses necessary to initiate production of taxable income;

Advertising: Advertising and sales promotion expenses inside C.R. or abroad are deductible;

Casualty losses: Casualty and theft losses, which are not covered by insurance;

Gifts made to the State

Personal Income Taxes

This group includes two categories:

1. persons whose income consist of a fixed salary or other remuneration and
2. persons with profit generating activities

a. - Persons whose income consists of a fixed salary

Any individual employed in Costa Rica pays a monthly withholding tax rate based on his salary.

Employment income (on a monthly basis) of individuals is subject to a progressive tax of 15% as follows:

• Income up to 323,000 exempt.
• In excess of 323,000 up to 485,000 10%.
• In excess of 485,000 15%.

The following tax credits can be applied by tax payers, once income tax has been calculated:

There is 560 monthly tax credit applicable to each dependent meeting the following criteria:

• A minor (under 18 years)
• Handicapped (physically or mentally), and therefore unable to make his own living.
• A high school or college student, not older than 25 years.

A 830 monthly tax credit applicable to the spouse only if there is no legal separation between them.

In case that both spouses are tax payers, the tax credit can only be deducted by one of them. b. - Individuals with profit generating activities

The following rates are applied to taxable annual profits:

• Profits up to 1,434,000 Exempt
• In excess of 1,434,000 up to 2,142,000 10%
• In excess of 2,142,000 up to 3,573,000 15%
• In excess of 3,573,000 up to 7,160,000 20%
• In excess of 7,160,000 25%

The following tax credit can be applied by tax payers, once income tax has been calculated:

A 1,800 annual tax credit for each dependent. Conditions to apply to this tax credit are the same as stated previously. In case that both spouses are tax payers, the tax credit can only be deducted by one of them.

Imputed Income

An individual taxpayer who does not file a tax return will be presumed to have earned income pursuant to the income schedule established by law.

The imputed income is based on a base salary of a mid-level government employee as published in the annual budget.

The following professions:

Doctors, Dentists, Architects, Engineers, Lawyers, Accountants, Economists and Realtors, are presumed to have earned 335 times the base salary if they do not file an income tax returns.

For Appraisers, Private Accountants, Technicians, and in general all other professionals and technicians the imputed salary is 250 times the base salary.

Corporate Income Tax For Corporate entities the following tax table prevails:

Gross income up to �21,468,000 10%

Gross income up to �43,183,000 20%

Gross income over �43,183,000 30%

Any industrial corporation is allowed to make deductions from their annual gross income according to the list of deductible items listed on page 2 of this document.

The tax administration can deem a deduction invalid under the following criteria:

belonging to another taxes period;

non-income generating;

excessive or unreasonable.

Depreciation and Other Allowances Depreciation rates cannot be higher than those prescribed by law, unless so authorized by the tax administration.

Companies can choose either the straight-line or the sum-of-digits methods of depreciation, though, once chosen, the method must be used consistently.

Accelerated depreciation is allowed in certain cases.

Other allowances are:

organizational and pre-operational expenses that can be paid from one to five years;

operational losses can be carried forward up to three years for industry and five years for agricultural operations.


Tax on Corporate Assets

The Tax Adjustment Law introduced a 10% tax on the assets of corporations whose assets exceed 30,000,000.00.

The law has several exemptions.

An accountant should be consulted as to the application of this law on your particular situation.

Tax on Capital

This tax is also known as the "Education and Culture Tax".

Every legal entity (corporation) as well as its subsidiaries, or agencies of a foreign company, which are duly recorded in the Costa Rican Mercantile Registry, must pay an annual tax based on its net capital or equity (assets less liabilities), according to the following table:

• For net capital up to 250,000: 750 per year (also applicable to negative capitals, i.e., liabilities higher than assets).
• For net capital of 250,001 and up to 1,000,000: 3,000 per year.
• For net capital over 1,000,001 and up to 6,000 per year.
• For net capital over 2,000,001: 9,000 per year.

Annual Property Taxes Starting November 30, 1995, the law states that the administration and collection functions for property taxes to the Local Governments (Municipalidades) where the property is located.

Under the new law, it will be these entities’ responsibility to conduct property appraisals and collect the corresponding property tax.

The property tax is established on an annual basis and may be paid annually, by semester or by quarter depending on the procedures established by each Local Government.

For the next five years, the property tax payment will be 60% of the appraised value of the property.

Starting on year six, the municipality may set its own rate not to exceed 1%.



Transfer Taxes

There is a 3% property transfer tax. This tax is based upon the registered value placed on the property transfer deed at the time of sale.

Tax on Distributed Profits / Dividends

Whenever a corporation distributes its profits as dividends, the following tax is applied:

When the profits are distributed to corporation partners, the corporation, for payment to fiscal authorities must withhold a 15% tax.

When dividends are distributed by a corporation whose shares are registered in an officially recognized stock exchange, a 5% tax must be withheld only if the shares were acquired through a stock exchange.

If the partner is another corporation also subject to this withholding tax and with its capital duly registered in Costa Rica, the tax is not applicable.

Sales Tax

The tax Adjustment Law increased the sales tax from 10% to 15%. Starting on November 18, 1995 this new sales tax will be in effect for the next 18 months. After this period of time, the rate drops to 13%.

Source: http://www.costaricaweb.com/business/cindetaxes.htm

Retirees and Taxes in Costa Rica

Recently I gathered some statistics about Tax-unfriendly states for retirees in the U.S. California leads the list. The Golden state is a retiree’s tax nightmare. Although Social Security benefits are exempt from state income taxes, all other forms of retirement income are fully taxed. Californians pay some of the highest income taxes in the U.S. State and local sales taxes can reach 10.5% in some cities and towns, although food and prescription drugs are exempt. Real estate is assessed at 100% of cash value, but taxes are capped at 1% of value. In Rhode Island Social Security benefits are taxed just like they are by the federal government. Rhode Island attacks virtually all other sources of retirement income, too. Starting this year, capital gains are taxed as ordinary income, eliminating the lower capital-gains rate in effect before 2010.

The nation’s smallest state also has one of the biggest statewide sales-tax rates — 7% — although it excludes food, medicine, some clothing and precious metal bullion. In Vermont there are no exemptions for retirement income in the Green Mountain State, except for Railroad Retirement benefits (which are exempt in every state). Out-of-state pensions are fully taxed. Vermont exempts medical devices and prescription and nonprescription drugs from its 6% sales tax. But it imposes a 9% tax on prepared foods, restaurant meals and lodging, and a 10% sales tax on alcoholic beverages served in restaurants. Real estate taxes have two components: school property tax and municipal property tax collected by towns and cities where the property is located. There are some other states that are slightly more kinder to retirees but don’t expect bargains. So, some retirees are looking to move abroad to stretch their pensions.

On the other hand you can save on some taxes by moving to Costa Rica. Home taxes are only a quarter of one percent of the declared value. For example, on a home that is assessed at $100,000 you only pay $250 in taxes. I know people whose home is worth more than that and they pay even less. There is also no capital gains tax on real estate.If you go into business your corporation can limit some of your tax liability here. Costa Rican corporations can also reduce your U.S. Taxes. I am not advocating tax avoidance but only stating that there some advantages to doing business here. Really the only taxes which are high here are those on imports and the sales tax. If you don’t buy a lot of imported items you won’t be affected that much by import duties. Sales tax is another matter. It is high here but since many items are less expensive than in the U.S. so you will still be saving money. The government has to get its operating money from some place to provide services so imports and sales are taxed.

I would like to mention that U.S. citizens including retirees are permitted to earn $91,500 tax free on active income (a job) while living abroad.

Article courtesy of Living in Costa Rica