The Costa Rican government is trying to reactivate a tax designed back in 2006 by the current Congressman Guillermo Zúñiga, who in 2006 – 2010 was the Ministry of Treasury.
The plan remains about the same: a yearly flat tax applicable to every single corporation registered at the Public Record Office, regardless if the company is active or not, income producing or not, regardless of the equity structure (Sociedad Anonima, Sociedad de Responsabilidad Limitada, Foundations, etc).
According to the Government, the main purpose of this tax will be to finance the Costa Rican Police Forces and the Congressman Guillermo Zuñiga added: “It is also to clean up inactive registered corporations from the public records office.” The Congressman Guillermo Zuñiga, who represents the Central Government, also believes that this tax will be a tool to control corporations used for non legal purposes such as money laundering.
In my humble opinion…
This is not a smart plan from any perspective, this is not the way to “clean up” the Public Record Office, which does not make any sense either, since anybody has the right to register a corporation and keep it inactive because no law is broken by doing that and, under no circumstances will this help to avoid money laundering in Costa Rica…
You don’t have to have to my tax experience to figure this out but, unfortunately this is the price we have to pay for having persons appointed by President Laura Chinchilla like former Ministry of Treasury and current Congressman Guillermo Zuñiga, and the current Ministry of the Treasury Fernando Herrero – who have absolutely no clue what they are doing – making these types of decisions in Costa Rica… once again.
Let’s hope that the current opposition from the rest of the parties at the Congress will stop this nonsense from becoming a law as it happened back in 2006.
7th December 2010 Update on Possible New Tax on Costa Rican Companies
On 7th December 2010, it was announced by the Chairman of the Treasury Affairs Commission at Costa Rican Congress and former Ministry of Treasury that the members of such Commission approved to send for voting a new Tax Bill #16306 which intends to tax Companies registered in Costa Rica.
To rent or buy this one hour video with Costa Rica Tax Expert Randall Zamora, please visit our Video On Demand page here.
How it works?
This new tax will simply charge every company registered as of the day the bill become law with $200 and to those companies registered within that very year, from there on the companies will have to pay $200 on a yearly basis.
Are there any exemptions?
This has not yet been made crystal clear. As far as we know, the only exemption made to the rule, according to Mr. Zuñiga, is that companies registered as PYMES or MICROPYMES (small to mid size companies) at the Costa Rican Ministry of Economy, won’t be liable for this tax.
As with many other thing in Costa Rica, this bill won’t become law overnight, so it will worth to keep a close eye on the process, so if you would like me to email you a more detailed analysis about this new Costa Rica tax legislation as soon as the details are announced, please contact me using the simple form at the bottom of this page.
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Written by Randall Zamora who is the President and CEO of CostaRicaABC.com, former CFO and Head of Accounting Department of multinational companies like Four Seasons Resort Costa Rica, active member of the Interamerican Accounting Association, Pro Bono Local Partner of The World Bank and contributor to their yearly publication “Doing Business Report.”
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