May was an important month for Costa Rica: the Organisation for Economic Cooperation and Development (OECD) officially invited the Central American country to join and become the 38th member of the organisation.
The Secretary-General of the organisation, the Mexican Ángel Gurría, issued a statement in which he said, “we are thrilled to welcome Costa Rica into the OECD family at a time when multilateralism is more important than ever. The best way to face the challenges of today’s world is to permit emerging economies, developing economies, and advanced economies to work together to find solutions”.
The process to incorporate Costa Rica began a decade ago and is now in its final phase. Throughout this transition, various significant changes have had to be made it its legislation to meet OECD standards.
Some of the most significant are:
- The Reform of the Stock Market Law which allows superintendencies to exchange all kinds of information with other national and foreign financial supervisory bodies, in order to improve the credibility and confidence of investors.
- The creation of a State and Third-Party Owned Assets Advisory Unit, which will improve the performance of these companies and their long-term sustainability.
- The international agreement on the liabilities arising from the damages of hydrocarbon pollution.
- Consumer Policies based on legislation, online commerce, and collective measures.
- Deposit insurance that creates a guarantee fund financed by all of the monetary entities in the Banco Central de Costa Rica (BCCR), which will cover every national saver, regardless of if their savings are in a public or private institution.
- A deposit insurance that guarantees savers from losses in the case of any financial collapses.
- Amendments to the duty-free laws to ensure that they are in line with other OECD countries.
This robust reform agenda and the measures taken by the Costa Rican State will open up new perspectives for the country. New foreign investment will be attracted, rates will be lowered, and the economic ranking of the country will be improved. Additionally, Costa Rica will cooperate further in the fight against tax evasion and money laundering, enhancing its global reputation even more so.
In this regard, tax and business consultancy companies will play a key role in advising companies looking to invest in the Central American nation, facilitating their submersion into the market. “Englobally is always up-to-date on the latest legislation, so as to keep its clients informed and ready to not just ensure the due compliance therewith, but also to explore other opportunities that may arise to enhance business,” said Enrique Lara, partner at Englobally Costa Rica.
One of the biggest changes surrounding the new OECD conditions for companies investing in Costa Rica is that they must reveal information on the final shareholders of the companies (individuals), whether they be Costa Rican or foreign. Banking policies will also be stricter in regard to international bank transactions, and there will be more selective regulations for service companies surrounding duty-free systems, explained Karen Abarca from Englobally Costa Rica.
Likewise, it is hoped the image of Costa Rican investors looking to work on projects overseas will be improved, as they will be supported by internal processes that improve their policies around the world. The economic stability and strength of the local currency, the Colón, will make things easier for international investors and open up opportunities to take advantage of situations related to differing production costs in other countries.
Costa Rica has also taken measures in terms of transparency and the improvement of data management. Last year a tax reform was introduced focusing on increased tax control measures. Additionally, electronic invoicing was also instituted. This process provides specific, real-time information to the tax office. The use of Big Data technology is being implemented to develop more specific and efficient interventions to reduce tax evasion and achieve more sensitivity and accuracy when deciding on tax policies.
The inclusion of Costa Rica in the OECD means that it becomes the 38th member of the organisation and is the fourth Latin American country and first Central American country to join. “As part of this Region we hope more countries are able to join in order to uphold the practices and legislation that facilitate trade processes. To do this, Englobally Costa Rica is ready to support Central American companies to develop their businesses on a regional scale, maintaining the existing regulatory compliance in each country”, stated Enrique Lara from Englobally Costa Rica.
As a member of the OECD, the Central American nation may take part in committees and work groups with experts on social, environmental, and economical matters that assess and encourage improved public policies and better standards for those countries within the organisation. An important platform on which to place its reliable evidence, statistical and analytical basis will help to drive Costa Rica forward on its road to becoming a developed country.
All that is left is the signing of the Costa Rica Adhesion Agreement at the OECD Convention. It will have to be approved by the Legislative Assembly of Costa Rica, and then delivered to the body, which is headquartered in Paris, before its official admission. This will mean that Costa Rica will join Mexico, Chile, and Colombia as being the only Latin American members of the international organisation which is over 60 years old.