Investor's Manual

General Instructions  Establish a Business  National Registry  Tourism Sector

Tourism Sector

Diagram N° 2 of the Tourism Sector illustrates the procedure regulating this sector.

1. Will the company be located within the Costa Rican shoreline area (ZMT)?[1]

1. If the company will not be located within the ZMT, please proceed to the question Do you wish to apply for tourism incentives?  (Section 4.4).
    

2. If the company will be located within the ZMT, please proceed to the question: Is the property subject to concession?  (Section 4.2).

2. Is the land subject to a concession?

To verify whether or not the land is subject to a concession, the applicant should make the corresponding  inquiries at the Real Estate Records Office or at the corresponding municipality.

1. If the land has a title to independent property and, therefore, is not subject to a concession, please proceed to the question Do you wish to apply for tourism incentives?  (Section 4.4).
    

2. If the land is subject to concession, please answer the question:  Is it located within the Papagayo Tourism Development Area? (Gulf of Papagayo or Bahia Culebra).

1. If the property is located within the Papagayo Tourism Development Area, please proceed to the ICT’s Executor Office in charge of the Papagayo Tourism Development Area.   (Section 4.5).
   
   Upon completing this procedure, please refer to the question:  Do you wish to apply for tourism incentives?  (Section 4.4).
    

2. If the property is not located within the Papagayo Development Area, please proceed to the question:  Type of concession within the Costa Rican Shoreline Area? (Section 4.3).

3. Type of concession within the Costa Rican shoreline are?

1. If a land concession already exists on the property, please proceed to the Assignment of rights for an existing land concession within the Costa Rican Shoreline Area. (Section 4.6).
    

2. If a concession has not been granted and it is not in force (in other words, it is a new concession), please   proceed      to the section on Procedures for a new concession within the Costa Rican Shoreline Area. (Section  4.7).

Upon completing these procedures, please proceed to the question Do you wish to apply for tourism incentives? (Section 4.4).

4. Do you wish to apply for tourism incentives?

1. If you do not wish to apply for tourism incentives, please proceed to the question: Is construction required?  (Section 2.3)
    

2. If the company wishes to apply for:

1. Non-fiscal incentives[2] please proceed to the Tourism Declaration (Section 4.12 / Section 4.13).
    

2. Fiscal incentives,[3] please proceed to the Tourism Declaration (Section 4.13) and subsequently to the Tourism Contract (Section 4.15).

Upon completing these procedures, please proceed to the question: Is construction required?  (Section 2.3)

5. ICT’s Executor Office in charge of the Gulf of Papagayo tourism development area

5.1 Requirements and description of the procedure.

Pursuant to current regulations, in order to obtain a concession at the Gulf of Papagayo Tourist Project, the applicant is required to participate in a public bidding process.  To this effect, the project’s Executor Office publishes a bidding cartel[4], for the concession of non-exploited areas.

There are no pre-established dates for these bids.  Thus, if the applicant wishes to obtain information on available land, this matter should be taken up directly with the Executor Office in charge of the Gulf of Papagayo Tourist Development Area, or else, through a letter requesting the information needed.  Written requests are usually answered, on an average, within thirty days after receipt.

To initiate the contracting procedure, the applicant should contact the Executor Office in charge of the Gulf of Papagayo Tourist Development Area, in order to:

1. Verify the availability of lands for concession.
    

2. Should there be an availability of land, the requirements of the published concession cartel must be verified.
   
   If the applicant considers that the requirements established in the cartel are out of proportion, discriminatory or illegal, the applicant may appeal the cartel, in accordance with the provisions established in the Law on Government Contracts and its regulations.

1. Submit the application for a land concession, in compliance with the requirements stipulated by the cartel.
    

2. The application will be reviewed by the technical staff of the Executor Office, in accordance with the following provisions:

1. Concessions within the project’s area are only granted to entities incorporated and domiciled in the country.
    

2. The concessionaires, natural persons, directors and representatives of such entities, must certify their moral and financial  standing to the Executive Board of the Gulf of Papagayo Tourist Project. 
    

3. Concession applicants must fully comply with the requirements stipulated by the bidding cartel.

1. The technical staff submits its report to the Executive Board of the Gulf of Papagayo Tourist Project.
    

2. The Executive Board submits its recommendation to ICT’s Board of Directors, for a final decision on the matter.
    

3. By laying out the reasons for the decision, ICT’s Board of Directors, grants concessions to those projects considered in the best interest of the country and that comply with legal requirements and existing regulations.
    

4. The concession granted by ICT’s Board of Directors is equivalent to the act of awarding a concession through a public bidding process, and it is for this reason that ICT’s resolution must be published in the official newspaper The Gazette (La Gaceta).
    

5. The concession contract must be duly registered at the Office of Land Concessions of the National Registry.  Either ICT or the applicant himself may carry out this formality.  In any case, all registration expenses are to be absorbed by the interested party.

5.2 Responsibilities.

The concession grantee agrees to assume the following responsibilities:

1. To comply with the responsibilities stipulated by Law N° 6758 and its Regulations, the Master Plan, the concession contract, the Environmental Impact Study, the dispositions stipulated by ICT’s Board of Directors, and any other applicable statutory requirements.
    

2. To make no changes to the project approved by ICT, unless expressly authorized by ICT.
    

3. Submit a compliance guarantee in the amount of up to five percent (5%) of the amount estimated for each stage of the project to be carried out.[5],[6]
    

4. Payment of royalty.[7]

1. The concessionaire will pay to ICT the amount of 1% per annum over the market value of the construction[8] of each condominium, business premises, or residence, built in the area granted under concession within the Costa Rican Shoreline Area (regardless of whether it is totally or partially exploited).
    

2. All concessionaires are subject to payment of the royalty stipulated by Article 48 of the Costa Rican Shoreline Law and Article 49 of the Regulations of said Law.[9]

1. Initiate the works within a maximum period of six months, as of the date of signature of the concession contract.  The deadline for the completion of the works will be determined in accordance with the timetable of the construction works, which the concessionaire must submit two months after the signing of the concession contract.

5.3 Term of the Concession.

The minimum term for land concessions is 10 years, and the maximum is 50 years; these concessions are renewable.[10]

Extensions may be granted for equal periods of time, provided the concessionaire or third party concessionaires holding definitive assignment of rights contracts, meet the following requirements:

1. Compliance with the obligations stipulated in each contract, as well as with the laws and regulations governing the Gulf of Papagayo Tourist Development Area.
    

2. To maintain the requirements needed to obtain the concession.
    

3. To maintain the area of the property its buildings and facilities well preserved.
    

4. To be up to date regarding compliance with contractual and regulatory obligations.

For each extension, the concessionaire must pay the ICT the present value of the amount originally paid for the concession.  For calculation purposes the average for the last twelve months of the six-month LIBOR rate, calculated on a yearly basis will be used.[11]

In case of evidence of non-compliance with the responsibilities acquired (administrative, financial, environmental, social), by the concessionaire, and for reasons of public interest, ICT will reclaim the concession[12] rather than extend it.  To this effect all corresponding indemnities will have to be paid, in accordance with the appraisal conducted by the General Income Tax Office [13]rather than extend it.

5.4  Transfers, leases, mortgages and trusts.

Any person who is interested in acquiring the rights of a concession, must meet the same requirements stipulated for a concessionaire, except in the following cases:

1. If the assignment is for individual residential use and in favor of natural persons.[14]
    

2. When the guarantee of a conssesion is acquired through an auction.[15]  In this case the adjudicatee of a concession under process of exection of the guarantee, will be acknowledged as the new concessionaire.[16] In order to be recognized as the new concessionaire, it must suscribe the new pertinent contract with the ICT, which can be modified in order to continue with the concessioned project or re-formulate it.
   
   In the contract which the concession and the assets and rights are levied, the ICT may agree as far as necessary to safeguard the rights of the creditor, pursuant to its obligation to protect the public interest and the nature of the concession.[17]

5.5 Requirements.[18]

1. Advise the Executive Board of any transfer initiative in regards to a concession whether total or partial, mortgage or trust.  The Executive Board will, subsequently, submit a report to ICT’s Board of Directors for their approval.
    

2. If approved by the Board of Directors, the transfer must be registered at the Office of Land Concessions of the National Registry.

Transfer operations are subject to a payment to ICT of one Dollar of the United States of America (U.S.$1.00) for each square meter of land transferred.   ICT’s Board of Directors shall make this payment prior to the approval of the transfer.  This amount will only be reimbursed if ICT rejects the transfer.  Said amount will be readjusted every five years, and the calculation will be based on the present value.  To this effect, the average for the last twelve months of the six-month LIBOR rate, calculated on a yearly basis, will be used.

5.6 Sanctions.

The concessionaire will incur in a disciplinary offence in case of the concessionaire’s or the leaseholder’s non compliance with any legal, regulatory and contractual obligations specifically applicable to his/her condition.[19] In this regard, the following sanctions apply:

1. Written warning.
    

2. Restitution for damages and prejudicial consequences, in case of environmental or archeological damages.  In addition, criminal sanctions may also apply, including the possible cancellation of the concession and the execution of the guarantee.
    

3. Partial or total execution of the guarantees, resulting from non-fulfillment of the obligations that are under guarantee, and additionally regardless of a possible cancellation of the concession. 
    

4. The cancellation as a result of the cases stipulated in Article 13 of Law N° 6758 and Article 22 of its Regulations.  These are, violations that may constitute serious actions.  ICT’s Board of Directors makes the final decision as to whether the cancellation of a concession is applicable, based on the report submitted by the Executive Board.  When a cancellation is agreed upon, ICT will recover the area granted under concession, acknowledging the value of any improvements made, in accordance with the appraisal made by the Income Tax Office.

Sanctions shall be enforced through the standard procedures stipulated by the Public Administration Law (LAP), except with respect to written warnings, which will conform to the brief procedure stipulated by this same Law (LAP).  The application of sanctions lies within the competence of the Executive Board,[20] with the exception of the cancellation of the concession, which corresponds to ICT’s Board of Directors.

5.7 Pertinent Legal Basis.

• Costa Rican Shoreline Law N° 6043 and pertinent reforms; Article 74.
   

• Regulations to the Costa Rican Shoreline Law N° 6043 and pertinent amendments, Executive Decree N° 7841-P; Article 93.
   

• Regulatory Law for the Development and Execution of the Gulf of Papagayo Tourist Project N° 6758.
   

• Regulations that Standarize the granting of the real guarantees that levy the Concessions  of the Gulf of Papagayo Tourist Development Area. Executive Decree  DE-29794-MP-TUR.
   

• Regulations to the Law for the Development and Execution of the Gulf of Papagayo Tourist Project, Executive Decree  DE-25439-MP-TUR.
   

• Regulations for the Feasibility of the Papagayo Peninsual Project. (DE-30175-MP)
   

• Regulations to the "General Master Plan of the Gulf of Papagayo Tourist Project", published in the Official Gazette N° 140, dated July 24, 1995.
   

• Objectives of the Gulf of Papagayo Tourist Development Area (administrative provisions).
   

• General requirements to request land concessions at the Gulf of Papagayo Tourist Development Area (administrative dispositions).
   

• General Guidelines (technical standards) of the Gulf of Papagayo Tourist Development Area  (administrative provisions).

6. Assignments of rights of an existing land concession within the Costa Rican shoreline area (ZMT)

Under certain specific conditions, this procedure may be less complicated than the procedure involving a new concession within the ZMT.

The procedure involving the assignment of rights is less complicated than that involving a new land concession within the ZMT, when the use of the land proposed by the project is concurrent with the use authorized by the concession (allowable or conditional use granted by the regulatory plan)[21]

The user is strongly advised to verify that the land use proposed by the project, coincides with the use (allowable or conditional) of the existing land concession, contemplated in the regulatory plan.  Regulatory plans establish three types of land use:

Allowable use: this refers to the priority use of the land.

Conditional use:  this refers to a secondary use (not a priority), but contemplated in the regulatory plan as an additional possibility, given the fact that it does not cause any conflicts with respect to the development of allowable uses.

Conflictive use:  consists on a use that is not permitted under any circumstances.

When the uses authorized for the land concession (whether allowable or conditional) do not coincide with the use proposed for the project, a request to change the use must be submitted to the municipality.  Said request will not be approved, unless there is a qualified technical justification[22]  to modify the regulatory plan.  In this case, the procedure becomes as uncertain and complex as the procedure involving a new land concession.  The procedure regarding this modification should be taken up before the entities involved in the approval of all coastal regulatory plans, which may resolve in a positive or negative manner.[23]

The applicant is advised to formalize the transfer of the concession and comply with the pecuniary obligations, until the municipality has approved the transfer and until the new contract has been duly signed.

6.1 Requirements and description of the procedure.

1. Prior to initiating this procedure, it is extremely important to verify that the authorized uses[24] for the concession (granted and existing), coincide with the use proposed for the project that is to be undertaken.[25]
    

2. When the interested party wishes to change the allowable use of the concession for a conditional use (both foreseen in the regulatory plan), an approval by the ICT and the corresponding municipality is required. 
    

3. To request a change of the use[26] foreseen in the regulatory plan, for another use that is not contemplated therein, the applicant should follow the procedures regarding modifications to a regulatory plan, in accordance with the Urban Planning Law, which involves ICT, INVU, a public hearing, and publication in the official newspaper The Gazette (La Gaceta).  
    

4. Should the proposed use coincide with the use authorized for the concession, or if approval had been obtained for a change in use, the applicant should:

1. Request municipal authorization for the assignment of concession rights, indicating whether the assignment is total or partial.[27] This authorization must be formalized through the resolution of the Municipal Council.   
    

2. Request to ICT or IDA, as the case may be (depending on the declaration of tourist or non tourist suitability of the coastal sector), the authorization for the assignment of concession rights, to which effect, the appropriate entity has thirty calendar days to make a decision on the matter.
    

3. Signing by both parties of the contract of assignment of rights of the concession. 
    

4. Registration at the General Concessions Registry by entering the document into record, by a notary public.

6.2 Average Processing Time.

The procedure regarding change of use (when the secondary use and the proposed use coincide): 6 months. Once the change of use has been obtained (or if the proposed use coincides with the allowable use): 6 weeks.

There is no specific deadline regarding the change of land use or for the authorization of a conditional use.

6.3 Pertinent Legal Basis

• Costa Rican Shoreline Area, Law N° 6043 and its amendments; Articles 41 and 45.
   
• Regulations to the Costa Rican Shoreline Area, Law N° 6043 and its amendments, Executive Decree N° 7841-P and its amendments, Articles 46, 49, 50, 58-60 and 84.
   
• Municipal Code, Law N° 7794 and its amendments.[28]
   
• Urban Planning Law N° 4240 and its amendments.

7. Procedures for a new land concession within the Costa Rican shoreline area. (ZMT)

Prior to undertaking this procedure, it is important to warn the interested party that he/she should verify whether other concession applications for the land have been previously submitted to the corresponding municipality.  Care should be exerted to make sure that the request for a land concession within the ZMT is accurate and meets all legal provisions (it should be recalled that this requirement 4, may be submitted before completing pre-requisites 1 through 3).  It is extremely important to take these precautions, since the compliance of pre-requisites 1, 2 and 3 (demarcation of public area, declaration of tourist or non-tourist suitability, and the approval of a regulatory plan), does in no way guarantee any priority over someone else who might have submitted the application first (requirement 4), even if this person did not complete pre-requisites 1, 2 and 3.    An applicant may comply with and pay for all three pre-requisites; however, the land concession may be granted to someone who had previously submitted the application for land concession.  In spite of the fact that this person may have not fulfilled or paid for the three pre-requisites, these are considered as fulfilled by the third party who applied for the concession at a later date and did not obtain said concession.

It should be noted that the demarcation of public areas, declaration of tourist or non-tourist suitability, and the approval of a regulatory plan, are procedures that are not part of the procedure involving the land concession request, but are responsibilities conferred onto the State.  However, since these have not been undertaken by the State, the applicant must undertake them, and in the case of the demarcation of public areas, and the elaboration and approval of the regulatory plan, the applicant usually absorbs the expenses involved.

7.1  Requirements and general description of the procedure.

The land concession procedure begins as of the date of the submission of the application.  The application may be submitted to the municipality at any time, but the procedures will not be initiated until a regulatory plan is in force; that is, until it has been published in the Official Gazette.

Nevertheless, there are areas where these requirements have been fulfilled, and where it is possible to make investments, without having to undergo through this previous stage, to this effect interested applicants may consult Section 6.1 or the corresponding municipality).

To obtain a new land concession within the desired coastal sector, the following individual requirements, which have already been referred to, must be fulfilled:  

1. ICT’s declaration regarding the tourist or non-tourist suitability of the area (Section 4.8).
    
2. Demarcation or boundary markings of the public area (Section 4.10).
    
3. Coastal regulatory plan,[29] (Section 4.9).
    
4. Submission to the municipality of the application for a concession within the ZMT (Section 4.11). 

Procedures 1 and 2 (ICT’s declaration and boundary markings) may be undertaken before or jointly with the elaboration of the regulatory plan.  However, both procedures have to be duly completed at the time of approval of the regulatory plan by ICT and INVU, to subsequently conduct the public hearing, adoption and publication of said plan.

8. ICT's declaration regarding the tourist or non-tourist suitability of the area.[30]

The declaration of tourist or non-tourist suitability within the shoreline area, as per Article 27 of Law N° 6043, lies     within the authority of ICT.  ICT may undertake this procedure on its own or at the request of municipalities or of an interested party.  Such declarations must be published in the Official Gazette, as of which date the area in question falls under the provisions of the above-mentioned law.

This procedure may be carried out in two ways:

1. At the applicant’s request, and subsequent to the submission of the application for a land concession within the ZMT, or

2. At the municipality’s request, for the purpose of organizing the areas under its administration.

8.1 Requirements and description of the procedure.

1. Submit a request for ICT to visit the area where the declaration is required.  Although there is no specific deadline for ICT to respond to this request, in accordance with the Public Administration Law (Article 262, paragraph c), it is understood that ICT’s response is to be issued within the next 10 calendar days.
    

2. Arrangements are made for ICT’s visit to the area.  The Institution will cover the travel expenses incurred by the ICT personnel that will make the inspections, thus, the investor will not have to make any payments in this respect. 
    

3. ICT conducts the inspection of the site, and will subsequently make a decision regarding the site’s tourist suitability, whose requirements and specifications are administratively determined by ICT.  For further details regarding the criteria utilized by ICT, please refer to the Annex of Section 4.8.4.
    

4. Even if the area had previously been declared unsuitable for tourist related activities, a reassessment can be requested, provided there is a well-founded analysis to the effect that the conditions of the area, according to ICT’s technical criteria—which are duly explained in the annex—have changed.

8.2 Average Processing Time.

An average of six (6) months.  There is no legal deadline for this procedure, since this issue is considered of an environmental nature.[31]

8.3 Pertinent Legal Basis.

• Costa Rican Shoreline Area Law N° 6043 and pertinent reforms.  Article 27.

8.4 Annex.

Criteria applied to the assessment and classification of an area’ssuitability or unsuitability for tourist related activities.

The following conditions are considered as favorable for tourist development and exploitation:

1. The access to the area.
    
2. The population’s social and cultural characteristics.
    
3. The natural attributes.

1. An analysis is made to determine whether the area is conformed by sandy or rocky littorals, rivers, estuaries and mangroves, establishing in each case positive and negative factors for tourist-related activities.  For instance, in the case of sandy littorals, a positive factor could be the color and compatibility of the sand, the slope, the nearby landscape, a dry beach area, the spaciousness and extension, the potential for recreational activities; and as negative factors, emerging rocks and stones, the reflection of the sand, erosion and pollution.
    

2. Common assessments are made of the littorals, estuaries and mangroves.  Among them, those derived from the general physical and environmental conditions (winds and breeze, microclimates, floods, annoying insects) and issues of a physical and spatial nature (accesses, public services, urban networks).
    

3. Related aspects are of a supra-littoral nature: quality, quantity of plant life cover, type of the substratum, landscape, irregular relief, and sandy rain.
    

4. Aspects related to the coastal sea:  transparency, temperature, color of the water, and quality of the surf, undercurrents, and pollution.

9. Coastal Regulatory Plan.[32]

9.1 Requirements and description of procedure.[33]

1. The interested party may verify with ICT, INVU, or the corresponding municipality, whether the area is included in a coastal regulatory plan.  This information may also be obtained by consulting Section 6.1.
    

2. In the absence of a regulatory plan (prior to undertaking any procedures at INVU) the potential investor must obtain the municipality’s approval for the coastal regulatory plan, to which effect, it should be clarified whether the plan will comprise the entire littoral or only part of it.  Municipal approval is required to pursue the development of the regulatory plan.
    

3. The coastal regulatory plan is submitted for the analysis of INVU and ICT, along with the municipal approval.  INVU’s revision is subject to a fee.[34]
    

4. Simultaneously with the submittal of the project for the regulatory plan to the INVU and ICT, the municipality proceeds to issue a public notice through which it summons the community in general to a public hearing regarding the adoption of the regulatory plan.  It sets the date, time and place for this hearing as well as the receipt for written observations.  During the public hearing observations may be made to the regulatory plan.
    

5. After the hearing, an analysis is made concerning the opinions expressed during the hearing, and a decision is made regarding the need to incorporate reforms into the proposed regulatory plan.  If reforms are adopted, the project for the regulatory plan must then be resubmitted to the three entities for approval.  If the observations are rejected, INVU’s and ICT’s criterion should be obtained in order to confirm their support to the original proposal.  The remedy for appeals is indicated in the Urban Planning Law, Article 13.
    

6. Following ICT’s and INVU’s approval, the municipality must formally adopt the regulatory plan, through an agreement reached by the Municipal Council.  The entire text must be published in the official newspaper The Gazette (La Gaceta).
    

7. The regulatory plan goes into effect once it has been published in the Official Gazette, 

9.2 Average Processing Time.

Three (3) years on an average but a minimum of one year.  There is no legal deadline for this procedure.

9.3 Pertinent Legal Instruments.

• Urban Planning Law N° 4240. Articles: 7, 10, 13 and 17.
   
• Costa Rican Shoreline Area Law Nº 6043. Article 31.
   
• Municipal Code. Article 13, paragraph  o).

10. Demarcation or boundary marking of public areas

10.1  Description and requirements of the procedure.

1. The interested party must submit the following documents to the National Geographic Institute (IGN), Department of Geodesy and Topography, Calculations Section:

1. The application of the interested party, together with a sketch or map of the land where boundary markings will take place, as well as a cartographical map indicating the location of the site.  The request must provide the applicant’s general information and an address for notifications. 
    

2. IGN will inform the interested party, in writing, the cost of the boundary marking, indicating the number of elements to be used for boundary marking (i.e., stones, poles, etc) and the time required for this work, as well as the total cost involved in this project (the cost will be valid for three months).

1. Formalization.

For formalization purposes, the applicant must submit the following documents, in accordance with the provisions of Article 62 of the Regulations to Law Nº 6043:

1. The corresponding municipality’s authorization, consisting in a transcription of the agreement reached by the Municipal Council, indicating the number of the session, the number of the Article and the date.  The above must be a firm agreement authorizing IGN to undertake the boundary marking.
    

2. The deposit, in Costa Rican currency, of the estimated costs for the execution of the work.  At this time, the interested party will also sign a letter of commitment in order to supply other necessary materials, as well as any other requirements needed at the site such as:  workers, over water transportation if needed, haulage of materials, lodging if the site is located far away from a village and does not offer lodging services.  The applicant should, likewise, guarantee that the boundary markings will be painted in yellow (“caterpillar” yellow), and that he/she agrees to cover any additional expenses that might result from a larger than expected job (payment made in advance at IGN’s office).[35]

1. The works required to comply with the boundary marking contracts will be carried out in the same order in which they were formalized, although consideration may also be given to factors of proximity  between contracts and process unification. Thus, IGN will determine the date it will start working on  the boundary markings, but in any case, this work has to be paid in advance.
    

2. The process ends with the publication in the Official Gazette of the notice concerning the intended demarcation, which consolidates the legal situation of the section of public area that is to be boundary marked.  One requirement for the above-mentioned publication, is that the work has to be paid in full; this in case there were additional expenses incurred that were not considered in the initial estimate
    

3. In accordance with IGN’s resolution 00-454, dated September 29, 2000:

1. The approximate minimum distance between boundary markings will be 50 to 75 meters where the littoral line is regular, and in irregular sections, the boundary stones will be placed at each determining inflexion of the border line of the public area.
    

2. The total cost of the boundary marking work should include a metal plate, where the number of each boundary marking and the installation date will be indicated.
    

3. Once IGN completes the topographical demarcation of the public area line, appropriate signage will be made using the boundary markings.  IGN will keep a graphic and numerical record of the position of each boundary mark, which will match future plan approvals and will serve to resolve controversies.
    

4. A copy of each record by section marked and contracted should be delivered to ICT and the corresponding municipality.
    

5. Boundary marking of mangroves and estuaries within a public area, is also subject to municipal approval, and for the execution of this work, IGN will request the collaboration of MINAE.

10.2  Estimated average duration.

A minimum of 6 months.  There is no legal deadline for this formality.

10.3 Pertinent Legal Basis.

• Implementing Regulations of the Law on the Shoreline Area N° 6043, and its Amendments, Executive Decree N° 7841-P and its Amendments. Articles 62 and 63.

11. Application for a concession on the shoreline area submitted to the municipality

In order to request a concession on the shoreline area:

1. It is necessary to complete the application for a concession on the shoreline area, which is available from the ICT and is appended hereto, or submit to the corresponding municipality a written document that meets all the requirements set forth in Law N° 6043 and its implementing regulations.  It is also necessary to submit all the basic documents stipulated in the Implementing Regulations of the Law on the Shoreline Area, which include a sketch of the property (showing boundary markers), a statement regarding the proposed use of same, measurements, certificate of legal capacity (for artificial persons), certification of distribution of capital stock (at least 50% of stock must be owned by Costa Rican citizens), and an address for the delivery of legal notices.
    

2. Once the application has been submitted and the regulatory plan[36] adopted, the Shoreline Office of the municipality conducts an inspection of the site.  Upon completion of the inspection, the Shoreline Office draws up an edict, which must be published, once only, in the Official Gazette, at the expense of the interested party.  Objections may be presented to the municipality during the period established in the edict.
    

3. If no objections are presented, the mayor of the municipality draws up the draft resolution.
    

4. If there are any objections, prior to drawing up the draft of the resolution, the mayor and the person in charge of the Shoreline Office hold a closed, oral hearing, attended by the applicant and those who presented objections.  At the end of the hearing, the draft of the resolution is drawn up.
    

5. The draft of the resolution recommends that the concession be granted or not granted, totally or partially, and specifies the duration of same, which ranges from five to twenty years.  If the concession is granted, the draft of the resolution must also stipulate the terms and obligations agreed upon.
    

6. The draft of the resolution is studied by the Municipal Council, which authorizes the concession and commissions the mayor to sign the contract.
    

7. Once the contract is signed, the municipality forwards it to the ICT or the IDA for approval.  The original documents are filed with a notary public, and certified copies are submitted to the General Registry of Concessions at the National Registry.

11.1 Estimated Average Duration.

Upon approval of the concession by the Municipal Council, a period of 30 days is granted to sign the contract and deposit the first annual payment of the lease.

11.2 Pertinent Legal Basis.

• Law on the Shoreline Area N°  6043 and its Amendments; Article 48.
   
• Implementing Regulations of the Law on the Shoreline Area N° 6043, and its Amendments, Executive Decree N° 7841-P and its Amendments. Articles 29, 34, 42, 46 and 49.
   
• Municipal Code, Law N° 7794 and its Amendments.
   
• Law on Municipal Planning N° 4240 and its Amendments.

11.3  Annex.  Form.

Form  Application for concession.  Form in English for reference only.

Form  Application for concession.  Form in Spanish for official purposes.

12. Incentives for tourism

Companies may request both fiscal and non-fiscal incentives.  The former are granted in connection with the Tourism Declaration, and the latter with the Tourism Contract.

1. If the enterprise opts for the non-fiscal incentives, it must apply for the Tourism Declaration[37] from the ICT.
    

2. If the enterprise opts for the fiscal incentives, it must first obtain the Tourism Declaration  and subsequently  the Tourism Contract.

Below is a summary of the incentives granted in each case:

12.1   Non-fiscal incentives obtained with the Tourism Declaration.

12.2 Fiscal incentives obtained with the Tourism Contract.

Fiscal incentives are regulated by the Law on Incentives for the Development of Tourism N° 6990, Article 7. These incentives vary depending on the type of activity authorized by law: lodging, air transportation, aquatic transportation, travel agencies (receptive tourism), and vehicle rental companies. The following table summarizes these incentives:

13. Tourism declaration

13.1 Requirements.

Submit to the Development Department of the ICT:

1. A written application, signed by the interested party or the legal representative, in the case of artificial persons, which specifies:  the activity to be carried out, where it will be carried out, and the commercial name that will be used.
    

2. Additionally, submit the legal documents, and comply with the technical requirements set forth in the respective guidelines for each activity (See Section 4.14, Appendices and Guidelines).
    

3. All documents submitted in a language other then Spanish must be translated into Spanish by a notary public, consul or official translator.

13.2 Description of the Procedure.

1. Once the application and all other necessary documents have been received, the Development Department forwards to the Legal Office all legal documents presented by the enterprise interested in obtaining the Tourism Declaration.
    

2. The analyst of the Development Department will review the documentation and the information provided by the company.  The Administration may make written comments, once only, and pass them onto the interested party within a maximum of one calendar month.
    

3. If corrections are to be made, the interested party must make the modifications in all pertinent documents and submit them again.  The ICT has 15 calendar days to issue its decision.
    

4. The ICT prepares a report containing its recommendations, and submits it to Management for a decision.
    

5. If the ICT does not communicate its decision within the allotted month, the application will be regarded as approved.

13.3 Legal Term.

One calendar month, counted from the presentation of all legal documents (see Article 10 of the Regulations Governing Tourism related Companies and Activities, amended by DE-29058-MEIC-TUR, published in the Official Gazette 220, of 11/16/2000). Also, if no decision is forthcoming within the allotted month, the application will be regarded as approved.

13.4  Pertinent Legal Basis.

• Law N° 7293 Regulations on all Exemptions Currently in Force, its Annulment and Exceptions and its Amendments.  Article 13.
   
• Regulations Governing Tourism related Companies and Activities, Executive Decree N° 25226-MEIC-TUR and its Amendments.
   
• Executive Decree N° 29058-MEIC-TUR, which amends the Regulations Governing Tourism related Companies and Activities. DE-25226.
   
• Tax Simplification and Efficiency Law N° 8114, Article 17, clause b.

14. Annexes. Guidelines. Tourism declaration.

1. Guidelines on requirements for obtaining the Tourism Declaration.
    
2. Guidelines on equipment and minimum infrastructure for lodging establishments, eating establishments and night clubs.
    
3. Inspection guidelines for lodging establishments, eating establishments and night clubs already in operation.

15. Tourism contract

15.1 Requirements.

To be submitted to the Incentives Department of the ICT:

1. A completed application signed by the interested party or by the legal representative, in the case of artificial persons, with all signatures duly attested.
    

2. A copy of the resolution in which the tourism declaration was granted.
    

3. In addition to these two legal documents, the economic requirements spelled out in the guidelines for preparing the economic study (Section 4.15.5, Appendices and Guidelines).  Also, when appropriate, the technical requirements detailed in the guidelines for each activity must be complied with.  There are additional requirements for those activities in which the development of new infrastructure is planned.

15.2 Description of the procedure.

1. Once the completed application has been submitted, it is reviewed by an analyst, who verifies that all requirements have been met and evaluates the economic study.
    

2. Once the documents have been checked, the ICT shall specify, in writing, any requirements not yet met, or any documents still to be submitted.
    

3. The interested party shall make any necessary corrections.
    

4. The ICT prepares a report containing its recommendations, and submits it to the Tourism Regulatory Commission,[40] for a final resolution.
    

5. The tourism contract is signed by the applicant, and by the representative of the ICT (who acts on behalf of the State, Article 18 of Law  N° 6990).[41]
    

6. Once the contract has been signed, and in order to claim the exemptions to which it is entitled, the company must submit a list of all items and materials it plans to purchase to the Incentives Department of the ICT, which will recommend to the Department of Exemptions of the Ministry of Finance that said contract be exempted.
    

7. The Ministry of Finance again reviews the application, and approves or rejects the exemptions.

15.3 Estimated average duration.

Six months.  The duration of the administrative process is not restricted by law.  However, in Article 17 of the Law, it is stated that the Commission shall have thirty calendar days to issue a decision on contract applications, once all documents have been received and all requirements met (and verified by the technical departments).  It is also stated that the ICT must execute the contract within the following 15 days.

15.4 Pertinent Legal Basis.

• Law on incentives for the development of tourism  N° 6990 and its amendments.  Articles 3-7.
   
• Executive Decree N° 24863-MEIC-TUR, Regulations of the law on incentives for the development of tourism and its amendments.  See amendment in DE-29215.
   
• Provisions regulating  the activities of companies that rent vehicles to national and foreign tourists. DE N° 25148-H-TUR.
   
• Tax Simplification and Efficiency Law N° 8114.

15.5 Annexes. Guidelines.

1. Guidelines on requirements for obtaining a tourism contract.  Requirements for specific activities.
    
2. Guidelines on requirements for preparing an economic study.
    
3. Guidelines on requirements related to the basic plans of tourism projects, for companies that plan to develop infrastructure.

[1] In accordance with Article 9 of the Costa Rican Shoreline Law N°  6043 and its amendments, the Costa Rican Shoreline Area is understood as the two hundred meter wide strip of land alongside the Atlantic and Pacific coastlines of the Republic, regardless of their particular characteristics, measured horizontally from the regular high tide, and including the land and rocks visible during the low tide.  For all legal purposes, the Costa Rican Shoreline Area does also comprise the islands, small islands or islets and large marine rocks, as well as all the land or natural formations jutting out from the ocean level within the country’s territorial oceans.  Cocos Island is excluded from this regulation, as it will remain under the direct domain and possession of the State, as well as those other islands, whose domain or administration falls under the provisions of Law N°  6043 and other special laws.

[2] Additional information on non-fiscal incentives may be found in Section 4.12.1.

[3] Additional information on fiscal incentives may be found in Section 4.12.2.

[4] The concession cartel must be published in the official newspaper The Official Gazette (La Gaceta) and in a nwespaper of nationwide distribution, in accordance with Article 5 of Executive Decree N° 25439.

[5] ICT will establish the amount, based on the recommendations made by the Executive Board.  The guarantee will be returned 60 days after completion of the works of the various stages, subject to the approval of the Executive Board.  Only the guarantees stipulated in the Law on Government Contracts and its Regulations will be accepted.

[6] Please refer to Article 16 of Executive Decree N° 25439

[7] Please refer to Articles 14 and 15 of Executive Decree N° 25439.

[8] In order to establish the market value of the construction, the values defined by the Costa Rican Chamber of Construction will be used as a base.  In case the interested party disagrees with this valuation, an assessment will be requested from an appraiser named by the Professional Association of Costa Rican Engineers and Architects and, the concessionaire must pay all expenses and fees.  Hotel facilities built on the Shoreline Area will not be subject to the payment of this royalty.  To this effect, the ICT will qualify the use and destination of each work.

[9] This royalty will be established in accordance with the appraisal of the General Income Tax Office using as a base the value of the concession of the land located in the restricted zone on the Shoreline Area.

[10] Please refer to Article 9 of the Executive Decree N° 25439.

[11]  Please refer to Article 10 of the Executive Decree N° 25439.

[12]  This is the Administrative Process, through which the ICT recovers the administration of an area of land given in concession, due to non compliance on the part of the concessionaire, in those cases where the term for exploitation of the concession has not expired.

[13]  Please refer to Articles 9 and 11 of Executive Decree N° 25439

[14]  Refer to Article 12 of Executive Decree N° 25439.

[15]  Added by means of the Article 6 of Executive Decree N° 29794.

[16]  Refer to Article 2 of the Article of Executive Decree N° 29794.

[17] Please refer to Article 5 of Excecutive Decree N° 29794.

[18 ] Please refer to Articles 12 and 13 of Executive Decree N° 25439.

[19 ] Refer to Articles 18 through 24 of Executive Decree N° 25439

[20]  The Executive Board’s decisions may be appealed before the Board of Directors within eight days after the decision has been notified.

[21] The approved uses for a land concession within the ZMT are the land uses, allowable and conditional, stipulated by the regulatory plan, since it is considered that these uses do not conflict with the established planning objectives for the specific area.

[22] Note should be taken that the land use assigned responds to both, an integral planning, as well as  studies involving physical, environmental, legal, and other aspects, as a result of which, the priority use of the land was determined.  Consequently, any modification is subject to appropriate justification.

[23] It should be clarified that, although the applicant may request a modification to the regulatory plan, this does, in no way, constitute a guarantee of rights or approval, as the Administration will resolve the matter based on the appropriateness or otherwise of the modification’s technical and legal justifications, as well as on allegations of general convenience.

[24] Remember that a shoreline regulatory plan establishes the primary and secondary uses of the land; these may be tourism, commercial, agricultural, residential or any other.

[25] Please not that the allowable and conditional uses of the regulatory plan must always coincide the use established in the concession contract.

[26] Any modification to the regulatory plan must be based on technical justifications and requires the approval of the entities involved in the authorization of the original plan, in accordance with the procedures established by the Urban Planning Law, Article 17 (public hearing, adoption and publication in the official newspaper The Gazette (La Gaceta)).  We must bear in mind that the municipality does not have the  power to authorize, nor ICT to approve, the assignment of a concession contract, if the use requested differs from the used adopted by the regulatory plan.

[27] In the case of a partial assignment of rights, the municipality requires blueprints or sketches describing the land to be assigned and the remainder that will be set aside. Furthermore, in accordance with the requirements stipulated in Article 20 of the Regulations of the Costa Rican Shoreline Area Law, the grantee must have the same qualifications as those applicable to the concessionaire, namely, to be a Costa Rican citizen (or a foreigner with five years of residence in the country), or a legal entity conformed by at least fifty percent of Costa Rican capital (the transfer of stock eliminating this proportion, invalidates the transaction, Article 47, Law  N° 6043)

[28] Only for purposes of an appeal for annulment, Articles 153-160.

[29] Note should be taken that for the regulatory plan to be in effect, it has to be published in the   official newspaper The Gazette (La Gaceta).  For additional information, please refer to Section 4.9.

[30] In accordance with the Costa Rican Shoreline Area Law, Article 19, prior to having a businessman use the land for tourism related activities, which is subject to a ZMT concession, the State must declare—through the ICT—whether or not the land is suitable for tourist-related activities.

[31] According to the Constitutional Court, when the procedures involve environmental issues, there is no deadline for the public administration to issue a resolution, as these are considered as qualified public assets, where the non application of deadlines, guarantees better environmental protection.  This point of view is not shared by all sectors.

[32] It should be recalled that prior to, or simultaneously with the undertaking of the project involving the regulatory plan, ICT’s declaration regarding the area’s suitability for tourist related activities, should be obtained, and subsequently proceed with the boundary marking process of the public area.

[33] The Costa Rican Shoreline Law requires the existence of a development plan, prior to granting concessions over said lands, and, consequently, to carry out any construction work.  Furthermore, from a technical point of view, the concept used in Law N° 6043 (development plan), corresponds to the kind under which various types of urban planning instruments are grouped such as:  master plans, regulatory plans, among others. In spite of the above, it was not until the Office of the Attorney General of the Republic issued a series of rulings on this matter, that this entity has clearly indicated that when Law N° 6043 refers to “development plans”, it is exclusively referring to “regulatory plans”, a conclusion which is not shared by all sectors.  However, said point of view is expressed in the Regulations to the Costa Rican Shoreline Area Law.  Please refer to the Articles of the Law Nº 6043, vs. the Articles of the Regulations.  Congress awarded the responsibility involving shoreline planning to ICT, and to the municipalities in a residual manner.  In this sense, it should be noted that Article 26 of said law, stems from the assumption of the existence of a “National Tourist Development Plan”, which would be the result of the work carried out by the Costa Rican Tourism Institute, the Planning Office, and other appropriate government entities.  This would include the general plan on the use of land within the Shoreline Area, in accordance with national development priorities, and taking into consideration the interest in keeping the area as part of the country’s national resources.  To this date, the plan has been neither carried out nor implemented.  On the other hand, Article 59 of the same law, establishes that all income earned by the municipalities derived from land concessions within restricted areas, should be distributed as follows:  40% for improvement works in the corresponding tourist areas, including investments in consultancy services, and those administrative expenses required for the purpose of the aforementioned law.

[34] The fee charged by the INVU (for the review of the regulatory plan) depends on the area covered by the plan.  From one to three kilometers, the INVU charges ¢250.000, and over 5 Ha., the fee will  amount to ¢5.000 colones per Ha. In order to collect these fees, the INVU bases the imposition of these fees on Article 70 bis of the Urban Planning Law (in the amendment to the Organic Law on the Environment).  Nevertheless, at INVU’s request, the feasibility of these charges was analyzed by the Attorney General’s Office.  Through document C-116-99, dated June 7, 1999, this office concluded that, given its legal context, the fee in question cannot be charged, as it constitutes a tax imposition, in which case, the law should have determined the parameters for such tax collection (principle of legal reserve).  As this principle is not fulfilled, the charge is illegal or questionable.

[35]   A requirement that is indispensable for publication in the Official Gazette.

[36] This means that the ICT has already declared the area suitable or not suitable for Tourism related activities, and that boundary markers are in place.

[37] Please note that the Tourism Declaration is separate and independent procedure from the declaration of suitability or non-suitability of the land for Tourism related activities, which is requested at the new concessions section in the Shoreline Area.

[38] To use of such terms, without having obtained the declaration, is considered a deceitful practice

[39] It should be pointed out that this type of license can be granted only by the corresponding municipality, not by the Costa Rican Tourism Institute.

[40] This commission is appointed by the President of the Republic and operates under the aegis of the ICT. Its membership is defined in Article 4 of the Law on Incentives for Tourism N° 6990

[41] The minimum information that must be contained in  the Tourism Contract  is defined in Article 19 of Law N° 6990.


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