COSTA RICA Law and Practice Contributed by: Germán Pochet Ballester, BioIuris
6.2 Environmental Taxes Costa Rica does not have a comprehensive system of environmental taxes. In practice, only a few fiscal instruments can be considered as such, and several others function more as regulatory fees rather than true taxes. The main environmental tax is the fuel tax, which allocates a portion of collected revenues to finance environmental protection programmes and the maintenance of national road infrastructure. Additionally, certain local governments impose waste management fees, particularly in urban areas, to cover the costs of solid waste collection, treatment and final disposal. Beyond these, there are other environment-related fees that are not considered taxes but serve environ- mental purposes. These include charges for the use and concession of water resources, managed by the Water Directorate, and concession fees for the use of the Maritime–Terrestrial Zone. While Costa Rica has not adopted a general carbon tax, it has implement- ed a carbon compensation mechanism through the National Forestry Financing Fund (FONAFIFO), which allows companies and individuals to voluntarily offset greenhouse gas emissions by purchasing certified carbon credits. Overall, Costa Rica’s fiscal approach to environmental protection relies more on economic instruments and incentive mechanisms than on formal environmental taxation. 6.3 Incentives, Exemptions and Penalties Costa Rica has implemented a combination of incen- tives and penalties to promote environmental compli- ance and responsible resource management. One of the main incentive mechanisms is the Payment for Environmental Services (PES) programme, estab- lished under the Forest Law and administered by the National Forestry Financing Fund (FONAFIFO). This programme provides economic compensation to landowners who engage in activities that protect or restore environmental functions, such as forest con- servation, reforestation, watershed protection and biodiversity preservation. The PES scheme has been internationally recognised as a key tool in Costa Rica’s sustainable development and climate policies. In addition, tax benefits and exemptions may apply to certain environmentally friendly investments, such
as renewable energy projects or the importation of electric vehicles and clean technologies, which are supported by specific laws and executive decrees. 6.4 Shareholder or Parent Company Liability In Costa Rica, shareholders or a parent company are generally not directly liable for environmental damage or breaches of environmental law committed by a sub- sidiary or corporation, given the principle of separate legal personality. However, exceptions apply when there is evidence of active participation, authorisa- tion or control over the harmful activities. If it can be proven that the parent company or specific sharehold- ers directed, ordered or benefited from the actions that caused the environmental damage, they may be held jointly (solidarity) liable under civil or administra- tive law. 6.5 ESG Requirements In Costa Rica, Environmental, Social and Govern- ance (ESG) requirements are primarily embedded within the country’s environmental and administra- tive legal framework, reflecting its strong constitu- tional commitment to environmental protection and sustainable development. Companies must comply with the Environmental Impact Assessment process before initiating any project that may affect the envi- ronment. Ongoing compliance includes monitor- ing emissions, waste management, water use, and reforestation or restoration duties, depending on the nature of the activity. Social aspects are governed by national labour, health and community protection laws in which companies must comply with the Labor Code and ensure occupational health and safety. Projects with social or community impact must include public participation and consultation processes. In summary, Costa Rica’s ESG framework is integrated into binding environmental and social regulations and supported by a strong institutional system for moni- toring and enforcement. Corporations must maintain proper corporate governance practices, including accounting transparency and shareholder reporting, and also disclose ESG-related performance as part of their reporting obligations. The National Stock Mar- ket Authority (SUGEVAL) promotes ESG transparency and has begun encouraging voluntary sustainability reporting aligned with international frameworks.
110 CHAMBERS.COM
Powered by FlippingBook