Global Income On The Table Again

The new tax reform proposal presented by the Ministry of Finance of Costa Rica includes the creation of a global income system to impose and collect a tax on the profits of companies and individuals.

Tuesday, July 3, 2018

Taxing all of the profits of natural and legal persons, including those currently paid separately by the identity code income method, is the principal new feature of the new tax reform plan presented by the Ministry of Finance.

The proposal states that " ... For the purposes of this tax, they shall be considered as lucrative activities, and must be taxed in accordance with the provisions of the income tax, all income, as well as the obtaining of all capital income and capital gains or losses." 

See: "Public Finances Still Deteriorating"

Regarding the scope of the reform, Allan Saborío, managing partner at Deloitte, explained to that " ... global income would involve including, in a single basket, the entire income of a taxpayer by applying a single rate even over income that today is taxed, separately, with "cedular" or identity code taxes. "

Welmer Ramos, president of the Fiscal Reform Commission in the Legislative Assembly, said that " ... The global income would facilitate the collection of the real tax burden that is needed to support each of the people in the economy. If we do not globalize it, then people are tempted to do some tax engineering to show that the income was earned in areas where there is less burden. That allows tax avoidance and evasion."

If approved, the changes could be included during the next few days in the Bill for the Strengthening of Public Finances. 

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