The Latin American Lawyer September 2018 LATAM MAGAZINE SEPT18 | Page 29

Global
Roundup
Special report:
Central
America
Fiscal reform package in Costa Rica could generate
substantial work for tax lawyers
Despite concerns about excessive regulation and high labour and energy costs, Costa Rica is attracting
investors due to its political and social stability and ‘high quality’ workforce
The potential introduction of a national
fiscal reform package to tackle Costa
Rica’s public debt could generate
significant work for tax lawyers in the
country, according to Carolina Flores,
Costa Rica managing partner at law
firm Arias. She adds that the current
level of public debt in the country has
caused alarm among local businesses as
well as among international institutions
such as the Organisation for Economic
Cooperation and Development (OECD).
Indeed, a recent report by the OECD
warns that the risk of a fiscal crisis in
Costa Rica is increasing.
While the Costa Rican government
has attempted to rein in spending, this
has been insufficient to properly address
the country’s public deficit, so more in-
depth tax reform is required, according
to Flores. She adds that, if the draft bill –
which aims to strengthen public finances
– currently in Congress is approved, it
will lead to a fiscal reform package that
will generate a significant caseload for
lawyers with companies and institutions
seeking advice on its implementation.
Flores says Costa Rica is currently
the top destination for doing business in
Central America. She adds that, despite
the fact companies operating in the
country face “excessive regulation and
high labour and energy costs”, clients
choose Costa Rica because of the “high
quality workforce, the political and social
stability as well as an attractive free
economic zone regime”.
Costa Rica is a hub for companies
doing business across Central America,
Flores says. She argues that Arias, with
its full coverage of the region – including
Panama – is well positioned to handle
multijurisdictional mandates, despite
the fact it has had to deal with a number
of partner departures in recent years.
Flores claims the firm has quickly
replenished its teams and reorganised its
management. “Streamlining management
and a more dynamic office integration
has enabled us to increase the intake of
larger, multi-jurisdictional M&A and
intellectual property projects.”
Carolina Flores
Investors in Central America demanding better
quality legal services
International investors in Central America
are demanding a higher standard of
legal services in the region, says David
Gutiérrez, partner at BLP Abogados.
While the legal systems are quite
similar across Central America and there
is also a degree of commercial integration,
clients seeking to do business in the
region are also increasingly expecting a
higher quality of service in every country
they target for investment, Gutiérrez
adds. “Clients don’t want to deal with
five or six different firms, opinions,
invoices or ways of doing things, nor do
they want to deal with a franchise-type
regional law firm with different standards
in terms of service, focus and teamwork
in each country.”
Central America should standardise
certain industries that are typical across
the region Gutiérrez says, as this could
help with economic and political stability
throughout the region and enable it to
attract more international investment,
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particularly from countries other than
the US, such as Spain. Central America
is a region of many opportunities for
investors, according to Gutiérrez. While
Costa Rica, El Salvador, Guatemala,
Honduras, Nicaragua and the Dominican
Republic have varied needs and markets
at different levels of maturity, the region
as a whole needs infrastructure to boost
commerce. The required infrastructure
includes not only roads, bridges, ports
and airports, but also technology and
support for logistics and customs. “With
a privileged location and a growing
population – which currently stands at 42
million – we need to increase our export/
import capabilities with more know-how
and machinery,” Gutierrez adds.
Gutiérrez, says Spanish companies are
among the most active when it comes to
taking advantages of opportunities in
technology, infrastructure, tourism and
agribusiness in the Central American
countries.
David Gutiérrez
September 2018 • THE LATIN AMERICAN LAWYER • 27