Few countries in Latin America are as promising for business investment as Costa Rica, with its rapid growth and exciting potential.
As Costa Rica’s economy continues to grow despite the current unfavorable global economic conditions, it is becoming an increasingly attractive market for your business to enter.
Before starting or moving your business to Costa Rica, it is very important that you understand the local tax and accounting requirements.
In this article, we will explain why you may need an auditor, as well as details on tax advice in Costa Rica.
Why does a company need an auditor in Costa Rica?
Local experience is crucial for foreign investors to navigate the complexities of doing business in a new country.
Costa Rica’s financial regulations, for example, can be particularly complex, requiring several months or even years to fully understand.
As a prevention of possible problems, it is recommended to use the services of local specialists.
Here are the three most common legal entity (company) structures in Costa Rica:
- Corporation/Stock Company (Sociedad Anónima – SA)
- Limited Liability Company (Sociedad de Responsabilidad Limitada – SRL)
SA is the most common legal entity in Costa Rica.
Learn more HERE
In general, there are no restrictions preventing foreign investment in Costa Rica, except in mining and electricity generation.
However, there are specific local laws and fiscal requirements when registering a new corporation in Costa Rica.
According to the Commercial Code of Costa Rica, every corporation must appoint a Fiscal to act as an internal auditor.
The Fiscal may be a member of the Board of Directors, but they do not need to hold that position. Fiscal’s primary responsibility is to monitor and protect shareholders’ investments.
So there is a need to have an auditor appointed in Costa Rica for your business. It is also important to note that the Commercial Code requires that accounting records be maintained in Spanish.
What is the role of an auditor in Costa Rica?
Until 2011, there were no mandatory legal requirements for private companies to submit audited financial statements.
According to tax authorities in 2011 According to an administrative rule published on August 31, companies classified as “large taxpayers” were required to submit audited financial statements prepared in accordance with IFRS within six months after the end of the financial period.
However, a new law was passed in September 2012 that gave tax authorities the right to request audited financial statements for all “large taxpayers”. Thus, beginning with the fiscal period ending in 2012, the requirement for audited financial statements has changed from an administrative rule to a legally based requirement.
Therefore, it is now mandatory for “large taxpayers” to audit their financial statements in order to fulfill their fiscal obligations.
It is important to have an experienced auditor in Costa Rica to ensure that your company complies with the country’s financial regulations.
What to look for in an auditor in Costa Rica?
There are certain factors to keep in mind when looking for an auditor in Costa Rica, including:
- The experience. Look for an auditor who has experience working with foreign investors and in your industry.
- Reputation: Check online reviews and feedback to gauge the quality of service you can expect.
- Language. Make sure the auditor you are working with is fluent in a language you are comfortable communicating with.
- Communication. If you will be spending an extended period of time outside of Costa Rica, choose a lawyer or firm that is adept at using online tools for easy management and reporting.
5 Reasons to Expand Your Business to Costa Rica
- Economic development
- Secure deployment
- Developing tourism
- Educated workforce
- A leader in clean energy
Let’s take a closer look at why Costa Rica is such an attractive place to do business.
1 – Economic development
According to the Global Prosperity Index, Costa Rica is the second most prosperous country in Latin America. The index highlights factors such as individual freedom, government policies and health services. Costa Rica’s GDP grew by 27 percent in 2022, higher than official estimates. Costa Rica has free trade agreements with China, Mexico, Chile, Canada, Panama and the Dominican Republic.
2 – Safe deployment
Costa Rica is one of the safest places to live and travel in Latin America. In a recent Gallup survey, Costa Rica ranked seventh among the region’s safest countries, and it ranked second in LATAM on the Global Peace Index.
3 – Developing tourism
In the 2022 report, which lists the countries where tourism has increased the most due to the pandemic, Costa Rica ranked third in the world. Its tourism is expected to grow by 74 percent in 2022, with about 2.35 million arrivals. The tourism industry is projected to grow by more than 12 percent by 2027.
4 – educated workforce
In Costa Rica, primary and secondary education is free and compulsory. This has resulted in a literacy rate of 98 percent. Costa Rican universities are well funded and professors from all over the world share their knowledge there. The government has invested heavily in tech skills training and startup ecosystems. Costa Rica is now the leader in software outsourcing in Latin America.
5 – Clean energy leader
Costa Rica is a world leader in the installation and operation of renewable energy. 100 percent of the country’s domestically produced energy comes from five different renewable energy sources: hydropower, wind, geothermal, energy biomass, and solar energy. This means that there is always a ready supply of affordable energy for the country.
Biz Latin Hub can provide you with an auditor in Costa Rica
Starting a company in Costa Rica requires the support of a qualified financial team from the start to ensure that your business complies with local laws and is well looked after by the authorities.
Without it, even a well-planned business can struggle to thrive. At Biz Latin Hub, we have a team of local professionals with a comprehensive understanding of the Costa Rican business environment, including its laws and complexities.
We are well equipped to assist foreign companies wishing to do business in the region in all accounting, tax and financial matters.
If you are interested in the Costa Rican economy, the possibilities of setting up a company there and need an auditor in Costa Rica, please. contact us today.