Remember that song “The day the music died”, well change “music” for “tax” and that would be January 28th, 2015.
The Costa Rican Supreme Court finally said that the Corporations Yearly Tax should not be collected any longer, ever since the Judges considered that 3 articles are unconstitutional.
Brief History of this Tax:
The Corporations Yearly Tax was created back on 2011, the purpose or intention of this tax was to fund the Ministry of Security in order for them to fight crime, well, we all know that really didn’t happened.
The Registro Nacional and the Banco de Costa Rica are, and I’ll explain further in this article why they still, the only entities authorized to collect this tax. The rates were, at first, around $300 for active corporations and around $150 for inactive corporations.
Let’s keep in mind that for the sake of this tax an active corporation means that is registered as such at the Tax Administration. The rates increased yearly and as of fiscal year 2014 the amount to pay for an active corporation is around $375 and for inactive ones around $187.50. The only corporations granted with a 100% exemption are the so called PYMES.
The penalties designed to make the corporation to pay the Corporations Yearly Tax were from 3% late monthly fee from forbidden the Registro Publico to process any document related to a delinquent corporation, not to mention that if the corporation fails paying the tax, after 3 years, the Registro Publico would have the right and obligation to de registered that corporation and go after the legal representative (Managers or Members of the Board of Directors)
To rent or buy this one hour video with Costa Rica Tax Expert Randall Zamora, please visit our Video On Demand page here.
Should you pay or not?
Although the Supreme Court voted as unconstitutional the Corporations Yearly Tax, as good politicians they gave some more room for the Governed to collect as much as they can, if they can.
This means that the Fiscal Year 2015 will be the last year for this tax, let’s keep in mind that the fiscal year in Costa Rica goes from October to September, so there will be one more payment to make before January 31, 2016, but that will be the last one.
I hate to say “I told you!”, but I clearly remember when I was asked to advice the Chairman of the so called Treasury Matters Commission at the Costa Rican Congress back on 2010, and I told to one of his advisors, currently Ministry of Economy, that they should not pass that bill and I listed not only the 3 reasons that the Supreme Court used as basis, but others, but again, as good politicians they never listened and of course, I decided not to waste my time anymore, and here we are 4 years later and hundreds of thousands of dollars wasted confirming that this tax should never existed at all.
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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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