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The long-discussed tax on corporations in Costa Rica was just approved. The first time I wrote a blog about the tax the Costa Rican government proposed on corporate tax was in December 2010, so the approval has taken quite a while.
For now, Congress, as well as Costa Rican government, has approved the new tax, and it is coming into effect on April 1st, 2012.
During 2018 and 2019, the Costa Rican government has not only introduced new taxes. They have also created new obligations for all who own a Costa Rican Corporation. These include the digital signature as well as the shareholder registration.
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How much tax should you pay?
The tax on corporations is based on the basic salary of a government employee, which is now 180,330. Colones [US$ 357]. This will change EVERY YEAR since salaries adjust at least once a year. Besides, for the year 2012, the due date will be April 1st, so you’ll have an incomplete year.
• Active corporations (those that are used to run a business or own assets) pay 50% of the basic salary, which will be 135,000 Colones [$267] if the minimum salary doesn’t change before April.
• Not active corporations (those that are not being used) pay 25% of the basic salary, which will be 67,500 Colones [$134] if the minimum salary doesn’t change before April.
These amounts change every year, so check how much you owe.
Which corporations in Costa Rica should pay the tax?
- Sociedad Anónima (S.A.) (active and inactive)
- Sociedad Limitada (Limited)
- Branches of International companies or their representative
When do you have to pay the tax?
- New corporations have to pay when constituted
- Existing corporations every year from 1st of January until the 31st of January
Where do you have to pay the tax?
It will be the same as the income tax and the Costa Rica luxury tax: by downloading the form from the internet and paying it at any governmental bank or by SINPE transfer.
If you own a corporation in Costa Rica, you have 6 month grace period to:
- Pay the tax on corporations
- Transfer any assets that you have in the S.A. into your personal name
- Dissolve the SA. If you do so before June 2012, you will be exempt from paying
- If you are only a corporate officer or director, you have 1 year to resign
Dissolve the corporation
If you have any unused corporations, ask your attorney to dissolve them. If all the shareholders agree, the law allows you to dissolve a corporation. You can move all your assets into one corporation, but make sure you understand the liability issues because that was probably the original reason you put each car in a different corporation and your Costa Rica real estate in another. Contact your attorney for information and counsel.
Liability on outstanding tax
As a real estate agent, I have become a board member of many corporations at closings because my clients were short on members of the board of the corporation that was buying the property in Costa Rica. Once the grace period is over, the new law makes board members and directors personally liable for the outstanding annual tax. So make sure that even if you don’t own any shares but if you’re on the board of a Costa Rican corporation, you resign within a year.
What happens if you just let it go?
- The law allows for the corporations to dissolve automatically when the payment of the tax has three years in arrears
- If the corporation has any assets at that time, the government will put a mortgage these assets for the tax debt
- If there is any payment pending, you will not be able to get a certification on that corporation from the National Register
- You will not be able to do any business with any governmental institution.
Where does the money of this tax go?
• 5% will go to the Ministry of Justice and Peace to finance adequate administration and to help to finance the Costarican jail system.
• 95% will be invested in citizen security programs to fight delinquency by the Ministry of Public Security.
I am sure there are lots of people who have bought at one time a home for sale in Costa Rica as an investment. Others dream about living in Paradise and then all forgot about it. If the squatters have not taken it, the government will now do so.
Before you take any legal steps on Tax on corporations in Costa Rica, contact your lawyer or click on the banner below for our services.
Contact your attorney for more information and counsel. If you plan to buy or sell a property in Costa Rica, contact me now.
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