In this article, iGaming industry consultant Ron Mendelson, Fast Offshore, seeks to debunk the top myths surrounding Costa Rican licenses, shedding light on the reality of operating a gaming license from the island.
Costa Rica has long been a prime destination for businesses in various sectors, including iGaming and fintech. Its reputation as a business-friendly jurisdiction is well-earned, but misconceptions and myths about the country’s licensing framework persist, putting off some entrepreneurs, partners, and players.
Myth 1: Costa Rica offers a specific gaming license
Contrary to what some may tell you, Costa Rica does not issue a specific iGaming license. Instead, companies establish themselves as general businesses and set the general objective as iGaming. This setup is perfectly legal, provided the company adheres to Costa Rican regulations and does not offer online gambling services to residents.
The absence of a dedicated gaming license is not a disadvantage, rather, it allows operators greater flexibility and fewer regulatory hurdles than jurisdictions with strict licensing requirements. However, there are some drawbacks in terms of scope, and of course, operators must comply with international laws and ensure responsible gaming practices.
Myth 2: Costa Rican licenses are not recognised internationally
While Costa Rica’s lack of a formal gaming license may raise concerns with some stakeholders, its reputation as a business-friendly jurisdiction lends credibility. While some banks and payment providers won’t partner with iGaming companies operating from Costa Rica, this is not due to the country’s ‘bad’ reputation but because they require a license by default. However, a Costa Rican corporate structure can serve as a solid foundation for international operations, especially when paired with reputable certifications and compliance measures. Working with a range of partners abroad is becoming more straightforward, and operators are free to work with crypto payments on their platforms. Alternatively, some businesses leverage additional third-party certifications or secure licenses from other jurisdictions to bolster their credibility. This hybrid approach ensures international recognition while taking advantage of Costa Rica’s tax advantages and low operational costs.
Myth 3: Costa Rica is a tax haven
Although Costa Rica offers favorable tax conditions, it is not a tax haven. Companies operating in Costa Rica benefit from territorial taxation, meaning only income generated within the country is subject to tax. This system is particularly advantageous for international businesses whose primary revenue is offshore activities.
However, the government enforces strict compliance and transparency. Companies must maintain proper records, submit annual reports, and adhere to anti-money laundering (AML) and counter-financing of terrorism (CFT) regulations. Misconceptions about Costa Rica being a tax haven often stem from misunderstandings about its territorial tax system.
Myth 4: Costa Rica lacks regulatory oversight
Some critics argue that the absence of a specific gaming license equates to a lack of oversight. This is far from the truth. Costa Rica has robust regulatory frameworks to ensure businesses operate ethically and responsibly. The country adheres to international AML and CFT standards, and companies must comply with local operations laws.
Costa Rica’s legal system also provides a stable environment for dispute resolution and contractual agreements. Businesses that fail to meet regulatory expectations risk penalties, including losing their business registration.
Myth 5: It’s easy to start a business in Costa Rica
While Costa Rica is known for its business-friendly environment, establishing a company requires careful planning and adherence to legal procedures. Entrepreneurs must register their businesses with the National Registry, obtain a corporate ID number, and fulfil tax obligations. Hiring a local representative like Fast Offshore is often necessary to navigate these requirements effectively.
Moreover, businesses in regulated sectors like iGaming must ensure compliance with international standards, which can involve additional certifications or legal considerations. While the process is manageable, it demands diligence and a clear understanding of local laws.
Myth 6: Operating costs in Costa Rica are always low
Costa Rica offers competitive operational costs compared to many other jurisdictions, but this doesn’t mean it’s universally inexpensive. Costs can vary depending on the business’s nature and specific needs. For instance, businesses requiring highly skilled labour or advanced technological infrastructure may face higher expenses.
However, the country’s stable political climate, skilled workforce, and modern infrastructure provide excellent value for money, making it an attractive destination for startups and established companies.
Myth 7: Costa Rican businesses face no restrictions on activities
Costa Rican law restricts certain business activities. For example, iGaming companies cannot offer services to residents within the country. This limitation ensures that the industry operates within legal and ethical boundaries.
Moreover, businesses must respect international laws and regulations, especially when conducting cross-border transactions. Failure to do so can lead to legal complications and reputational damage.
Myth 8: Costa Rica is only suitable for iGaming companies
While Costa Rica is a popular hub for gaming, its appeal extends to a wide range of industries, including technology, fintech, and call centres. The country’s strategic location, skilled workforce, and attractive tax regime make it an ideal base for international businesses across various sectors.
Myth 9: A Costa Rican business can operate without local representation
Costa Rican law requires companies to have a local representative or registered agent to handle legal and administrative matters. This requirement ensures businesses maintain a presence within the country and comply with local regulations.
For smooth operations, choosing a reliable local representative with experience in the country is crucial. Fast Offshore is the perfect choice to act as a liaison between the business and Costa Rican authorities, ensuring timely compliance with legal obligations.
Myth 10: Costa Rica’s legal system is inadequate for international businesses
Costa Rica boasts a well-established legal system that provides a secure business environment. The country has signed numerous international treaties to protect investments and foster trade relations.
Dispute resolution mechanisms, including arbitration and mediation, are available to address conflicts efficiently. Companies operating in Costa Rica can safeguard their interests by relying on a stable and transparent legal framework.
Conclusion
Costa Rica remains a top choice for businesses seeking a supportive and flexible environment. While misconceptions about its licensing system persist, the country offers significant advantages, including territorial taxation, a skilled workforce, and a stable political climate.
Understanding the myths and realities of Costa Rica’s licensing framework is essential for making informed decisions. The next step is to speak to a professional such as Fast Offshore to find out more about Costa Rica as a jurisdiction for your online gambling platform.
Original article: https://www.yogonet.com/international/news/2025/01/06/90904-top-myths-about-costa-rica-licenses-debunked
