Tax Fraud: Convictions in Costa Rica

For the first time, the country's Courts of Justice sentenced six people to 10 years in prison for tax fraud against the Public Treasury, a sentence that corresponds to the case of a clothing importing company that defrauded over $575,000.

Wednesday, October 7, 2020

Carlos Vargas, general director of Taxation, indicated that during 16 years the taxpayer who was condemned used all the procedural guarantees until the last instance. This implied the follow-up of the case by the different actors of the State: General Attorney's Office, Courts of Justice, Public Ministry and the Ministry of Finance.

The statement of the Ministry of Finance specifies that the investigation carried out by the Tax Administration found that the amount of tax on unpaid profits exceeded ¢149.7 million for 2001 and ¢230.8 million for 2002.

In 2004, the General Directorate of Taxation (DGT) filed a complaint with the Public Prosecutor's Office, due to indications of tax crimes, in relation to the profit tax for fiscal years 2001 and 2002, as a result of a series of irregularities, detected during the tax inspection procedure followed against a number of individuals and legal entities that made up a chain of stores nationwide.  This process involved a complex investigation by the Treasury, which included the review of 156 persons involved, explains the official document that was released on October 7.

The statement explains that "... this group, in total 53 legal persons and 103 natural persons, were dedicated to the import and commercialization of clothing and shoes, through commercial establishments located in different areas of the country, which were registered before the Tax Administration, independently and under the Simplified Taxation Regime."

For Vargas, this ruling from the Courts of Justice sets a fundamental precedent that proves that in Costa Rica it is possible to be convicted for evading the Treasury. It is the first time in the history of the country that a firm sentence is given for a tax offense, which besides affecting the taxpayer, falls on his collaborators, in this case supervisors and accountants.

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More on this topic

Panama: Strengthen Penalties Against Evaders

January 2019

The law that criminalizes tax evasion was approved by the National Assembly when the amount defrauded in a fiscal period of one year is equal to or greater than $300.000.

With a majority vote, Project 591, which criminalizes tax evasion in the Criminal Code and is considered a crime resulting from money laundering, was approved in the third debate, informed the Legislative Assembly.

Costa Rica: The Cost of Tax Evasion

February 2016

Treasury data shows that in respect to income tax on legal persons, there was a 70% shortfall on potential revenue, representing 4.23% of GDP.

"... We are still finding fraud, smuggling, omissions, arrears and taxpayers taking advantage of weaknesses in our laws, they are still looking for ways to default on their obligations, therefore we are trying to improve controls and our tax laws," said Helio Fallas, Minister of Finance in Costa Rica.

Bill to Require Retailers to Accept Credit Cards

August 2014

A A bill presented in Costa Rica aims to improve tax controls by forcing merchants to accept payments with credit and debit cards.

The bill introduced in the Legislature by the Ministry of Finance, entitled "An Act to improve the fight against fiscal fraud" includes other initiatives such as the imposition of a sales tax on property rentals of less than one month duration.

Tax Offenses to be Part of Criminal Code

January 2012

A bill to include tax offenses in the Penal Code concerns Panamanian business.

A statement from the Chamber of Commerce, Industries and Agriculture of Panama (CCIAP) reads:

The CCIAP promotes compliance with the duties of the state and recalls the importance of respecting the rights of taxpayers

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