L2b Aviation Global Aviation News: How Changes in Costa Rica’s General Customs Act Impact the Aviation Industry with María Fernanda Redondo of Nassar Abogados
During the L2b Aviation July live stream event, María Fernanda Redondo of Nassar Abogados explored the implications of the newly approved and enforced regulations in the General Customs Act in Costa Rica. These amendments are crucial for the aviation industry, particularly concerning cargo, Company material (COMAT) and Aircraft on Ground (AOG) events.
Understanding these new regulations is essential for airlines and cargo stakeholders to avoid penalties and customs detentions.
Costa Rica’s Air Cargo Operations
Air cargo operations play a pivotal role in Costa Rica’s development, particularly for industries such as medicine, technology, manufacturing and perishable goods. The significance of air cargo heightened during the COVID-19 pandemic when passenger travel plummeted.
According to the Civil Aviation Authority of Costa Rica, the San Jose airport received approximately 20,742 cargo operations, accounting for roughly 101,000 metric tons of cargo. Furthermore, over 29 airlines operate in Costa Rica, conducting regular and non-regular flights or charter operations. Therefore, the implications of new regulations to the General Customs Act directly impact the growth and relevance of air cargo in Costa Rica, presenting opportunities and challenges for the aviation industry in the country.
María Fernando Redondo summarized the customs regulations, specifically focusing on how they affect air cargo, including the treatment of company materials, spare parts and imports and the transportation of aircraft cargo by air.
Background of Costa Rica’s custom regulations
Costa Rica belongs to the Central American Customs Union, which includes regional regulations for Guatemala, Honduras, Nicaragua and El Salvador. On May 1, 2021, Costa Rica enacted the new Central America Customs Code (“CAUCA”) and its Regulations to the General Customs Law, introducing significant changes to terms and procedures in the customs system. On June 29, 2022, the reforms to the General Customs Act entered into force, adapting the domestic law to align with regional regulations. The General Customs Directorate sought to reform regulations to establish a simpler and safer customs system.
Three major changes in customs regulations affecting Costa Rica air cargo
- Changes in the treatment of overage and shortage of cargo
One of the more substantial changes that directly impact carriers concerns the treatment of the shortage and partial shipments. These changes include penalties, fines and specific rules regarding procedures and obligations.
Airlines frequently receive packages that deviate from what the airway bill indicates. New regulations altered the filing process to justify these differences, reducing the filing time from one month to 15 business days and simplifying the process by eliminating the need for apostille documents.
Moreover, the new regulations now allow other parties, such as supporters, consolidators and consignees, to file these justifications, providing more flexibility. Previously, the airlines were the only ones who could file justifications, even though the airline may not know the details of the cargo amount. This is crucial since noncompliance fines are equivalent to the value of the goods, with the possibility of doubling the fine for recidivism.
The authorities must issue rulings on these justifications within three business days, significantly improving cargo movement during the waiting period when customs detain cargo.
2. Changes in the treatment of partial shipments
Partial shipments are an important piece of air cargo. It is globally known that air cargo is the fastest means of transportation rather than by land or sea, and people are willing to pay more for quicker delivery. However, previous regulations treated partial shipments as a cargo shortage or overage, leading between a one-week to a month delay in releasing the cargo.
The new regulations redefine partial shipments to include packages associated with the same master airway bill but transported in two or more flights arriving in the territory. This recognition now streamlines the process, treating partial shipments as part of standard air operations rather than an exemption.
3. New category for temporary import of parts and spare parts
Previously, airlines were obligated to conduct temporary imports for each shipment, rendering a guarantee equivalent to the amount of duties. This time-consuming and complex process lead many airlines to pay customs duties even when not required for preventive maintenance or aircraft-on-ground events, resulting in unnecessary expenses.
The new regulation allows the import of aircraft spare parts under a temporary regime without a guarantee, permitting the merchandise to remain in the country for up to one year. The authorization process takes one to three days, making it more efficient for airlines. If the merchandise is used, an affidavit will be required to conclude the import, and if not used, the airlines must re-export the merchandise within the designated timeframe.
Other customs categories may be considered as well, for example, conducting a tax-exempt import due to an Air Service Agreement. Costa Rica has signed more than nine air service agreements. Those agreements also contain provisions related to customs duty exemptions for spare parts and company materials.
It is essential for the aviation industry to actively participate in the regulation process to ensure the needs of the aviation industry are considered. By doing so, the industry can avoid facing challenges due to regulations that fail to account for its unique requirements. Being well-informed about the new requirements, rules and fines is the best way to establish a preventive culture.
AOG events cause the loss of thousands of dollars to the airlines. Therefore, the quicker the aircraft can be flying again, the fewer the losses. In this sense, having good advice on how to manage the import of such parts can represent time and cost savings.
Staying updated on the new cargo regulations in Costa Rica will help airlines avoid costly fines, losses and unnecessary ground time.
About Nassar Abogados and María Fernanda Redondo
Nassar Abogados is an award-winning law firm with over forty years of experience providing legal services in Central America. Their expertise covers arbitration, litigation, dispute resolution, customs and the environment.
María Fernanda Redondo specializes in customs, aeronautical and maritime law, focusing on temporary importation, registration and regulatory compliance for aircraft and ships. Her legal advice benefits airlines, shipping companies and businesses operating in customs special regimes, including free trade zones.
About L2b Aviation
L2b Aviation is a network of over 45 law firms specializing in aviation, representing 54 countries around the globe. All members are carefully selected from the leading specialist aviation law firms in their jurisdiction.
Its members are widely recognized for providing tailored, responsive, consistent and personal service. It has in-depth knowledge and extensive experience in all aspects of aircraft/ engine leasing and financing, including operating leases, export credit financings, commercial debt financings and tax-based transactions.
- July 2023