Frequently Asked Questions
Donation and Destruction
 Free Zone companies can donate and destruct merchandise they choose not to discard.
Article 16 of the Free Zone Act states that local governments of the area where Free Zone companies operate have first refusal over shrinkage, by-products, and waste discarded by those companies, as long as these can be treated at either local or domestic level and are not hazardous to the population. In these cases, local governments are authorized to directly sell them. In case shrinkage, by-products, and waste cannot be treated at local / domestic level, the company is responsible for providing appropriate treatment.
Producers or suppliers of goods like those discarded by Free Zone companies feel damaged as a result of handling of shrinkage, by-products, and waste by the local government, they can file a claim to the Ministry of Economy, Trade, and Industry. The Ministry will find for the claimant if it sees the claimant is in clear disadvantage. To solve these conflicts, the Ministry of Economy, Trade, and Industry will decree the procedure to be followed.
- What can you donate?
- Merchandise, machinery, and equipment - Definition
- Waste - Definition
- By-products - Definition
- Whom can companies donate merchandise, machinery, equipment, waste and / or by-products?
- Should companies give notice to local governments prior to destructing merchandise, machinery, and equipment?
- Must companies contact local governments prior to donating waste / by-products, as local governments have first refusal?
- What must companies do to discard goods?
- Procedure to donate to organizations authorized by IMAS
- Steps to follow when donating to municipalities or organizations authorized by IMAS
- What must companies do when they decide to destroy merchandise
- Documents to be completed by Free Zone companies.
- Related Documents
Steps to follow when donating merchandise to municipalities or organizations authorized by IMAS
01. What can you donate?
Companies can donate merchandise, machinery, and equipment they own, as well as waste and by-products.
Top
02. Merchandise, machinery, and equipment - Definition
Merchandise comprises all tangible goods the company brings in under the Free Zone System. Machinery and equipment are goods used to develop / transform other goods and services.
Top
03. Waste - Definition
Merchandise remaining upon completing production.
Top
04. By-products - Definition
Secondary goods resulting from production.
Top
05. Whom can companies donate merchandise, machinery, equipment, waste and / or by-products?
Companies can donate to the local government under whose jurisdiction they operate or to organizations authorized by the central government to receive those donations, as per the authorization list issued by the Costa Rican Social Assistance Board (Instituto Mixto de Ayuda Social - IMAS.)
Top
06. Should companies give notice to local governments prior to destructing merchandise, machinery, and equipment?
No notice is required when merchandise, machinery, and equipment to be either donated or destroyed are not the result of the firm’s production process.
Top
07. Must companies contact local governments prior to donating waste / by-products, as local governments have first refusal?
Although Article 16 of the Free Zone Act states that shrinkage, by-products, and waste of the firm’s production process discarded by Free Zone companies must first be offered to the local government, it is fair to say here that this is the case when the firm decides to discard them, as stated in Article 79 of the Free Zone Act Bylaws.
Thus, Free Zone companies must first resolve whether they really want to discard those goods or use them for other purposes.
Top
08. What must companies do to discard goods?
They must go by Article 16 mentioned above and send a note to the local government under whose jurisdiction they operate to report said waste. The firm must specify type, quantity, full description of waste. They can even mention how often they need waste to be picked. The Free Zone company must wait for three days after the local government receives the note. In case no representative of the local government shows up, then the company can donate the goods to any government agency of those listed by IMAS.
Top
09. Procedure to donate to organizations authorized by IMAS
The Free Zone company must inform the organization listed by IMAS about its purpose to donate merchandise. In case the organization is interested, the Free Zone company will make arrangements with the customs house to donate.
For organizations listed by IMAS as authorized to receive donations, go to Sundry Documents; then Audit Requirements under Shrinkage, By-products, and Waste.). In the case of companies not listed, contact IMAS to incorporate them.
Top
10. Steps to follow when donating merchandise to municipalities or organizations authorized by IMAS
They must draft the appropriate record and have it signed by the Customs and the organization’s representatives, together with the company representative.
Top
11. What must companies do when they resolve to destroy merchandise?
They must draft the appropriate record and have it signed by the Customs and the organization’s representatives.
Top
12. What must Free Zone companies do when they resolve not to discard those goods?
Since companies still own those goods and in line with the interpretation from the Counsel’s Office of the Costa Rican Foreign Trade Ministry # DAL-398-01, no restrictions exist for companies to export goods, sell them to other Free Zone companies or sell them to companies operating in Costa Rica (once nationalization taxes are paid; see Nationalization procedure; insert link to Nationalization). Companies can also recycle those shrinkage, by-products, and waste.
Top
13. Documents to be completed by Free Zone companies
Companies must develop Free Zone Customs Declarations (aka Single Policies) either for Export (EXP), Sale to a Special System (VRE) or Local Sales (VL) as well as for definite import, in order to pay taxes required when selling to individuals or companies inside Costa Rica, as appropriate.
Top |
