Taxes and regulation

As in many Latin American cultures, tax evasion in Costa Rica is quite common. Many businesses will sell you products and services tax-free if you pay in cash. A large number of business are completely off the grid. In other cases, the tax laws are so outdated as to be completely ineffective or insignificant. At an annual 0.25% of the official value, property taxes are barely even noticeable.

Other regulations are quite a bit more noticeable. Labor law is tough on the employer and rather strictly enforced when an employee brings a lawsuit. That means paying everything from year-end bonuses to disability to maternity leave must be carried out to the letter. Also, the country’s social security administration (Known as La Caja Costarricense de Seguro Social, or simply La Caja) is getting better at making surprise visits to different businesses to check payrolls.

The country has quite a few business regulations and permitting processes that, again, are beyond the scope of this book. Be sure to hire an attorney and check with the local municipality before you invest any money in a hotel, a restaurant, or any other business. Even if enforcement of the country’s Christmas tree of regulations is spotty, it does happen.