General Attorneys Office binding official opinion (Dictamen C-097-2016)

General Attorneys Office binding official opinion (Dictamen C-097-2016)

The General Attorney´s Office recently rendered a binding official opinion (Dictamen C-097-2016) to respond the queries submitted by the Municipality of Alajuela regarding Law N° 7210 (Free Zones Regime Law or FZRL) and an alleged contradiction with Law N° 7509 (Real Estate Property Tax Law) which substituted Law N° 27 (Territorial Tax Law).

As known, Article 20 d) of the FZRL grants a ten year exemption on the payment of territorial taxes to the beneficiaries of the FZRL. The queries referred to the following three matters.

  1. Whether the Real Estate Property Tax created by Law N° 7509 should be understood as the same tax which was previously called the Territorial Tax.
  2. Whether the companies that entered into the FZR before the enactment of Law N° 7509 maintain their exemption on the Real Estate Property Tax for a ten year term.
  3. If Law N° 7509 tacitly eliminated the tax exemptions stated in article 20 d) of the FZRL.

Regarding point 1, the opinion concluded that “the former Territorial Tax and the current Real Estate Property Tax represent the same tax, despite their diverse denomination and legislative regulation.”

Next, on point 2, the opinion indicated that companies granted with the regime before the enactment of Law N° 7509 will continue to enjoy the exemption on Real Estate Property Tax until the aforementioned ten year term ends.

Finally, on point 3, the opinion determined that by enacting Law N° 7509 Congress did not intend “to make a restrictive enumeration of real estate property not subjected to the tax at issue”, thus making incorrect any interpretation that Law N° 7509 eliminated the exemptions granted to FTZ companies.

The opinion also points out that the FZRL is a special law, which means it cannot be repealed by a general law, such as Law N° 7509, unless it explicitly stated so.

In conclusion, the opinion states that FTZ beneficiary companies, including those that became beneficiaries after the enactment of Law N° 7509, will continue to enjoy the exemptions stated in Law N° 7210, article 20 d), for a 10 year term.

Zurcher Odio & Raven

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