The Legislative Assembly is preparing to consider, in the first debate, a bill aimed at exempting inactive companies from the obligation to file an income tax return.
The file of this legislative proposal is number 22,307 and was presented by Deputy Pablo Heriberto Abarca. The initiative will be discussed in the Assembly, despite the opposition of the Ministry of Finance.
In order to tax the total amount of profits of individuals or corporations based in Costa Rica, regardless of where their profits are generated, a bill was submitted to the Assembly that seeks to amend the Income Tax Law.
Currently in Costa Rica a territorial income system is applied, which consists of taxing profits produced exclusively at the local level.
Despite a severe economic crisis, Costa Rican authorities have approved the imposition of a 1% VAT on several foodstuffs in the basic food basket, and 4% on certain tourist activities and construction services.
Before the emergence of the pandemic, the Costa Rican economy was already in a difficult state, and the impact of the covid-19 outbreak ended up hitting it in the worst way, which is evident in the performance of productive activity.
A three-month moratorium on the payment of value added taxes, business income and customs duties is the proposal of the Executive in view of the emergency caused by the spread of covid-19 in the country.
The initiative "COVID-19 Tax Relief Project", which was presented to the Legislative Assembly on March 16, proposes that taxpayers can postpone the payment of taxes for at least three months. During this period no fines or interest will be applied to those who take advantage of this moratorium.
In Costa Rica, taxpayers interested in benefiting from exemptions or reduced rates of payment of Value Added Tax must register with the Directorate General of Taxation.
The changes were detailed on October 15, 2019, when the resolution of the General Directorate of Taxation (DGT) No.
Until April 2 will be in public consultation in Costa Rica the regulations of the Value Added Tax Law, which incorporates the changes of the first proposal disclosed on January 29.
This is the second consultation carried out, since on January 29, 2019, the proposal for "Regulation of Title I of Law No.
Regulations of the Value Added Tax Law in Costa Rica are in public consultation until February 4.
From the Ministry of Finance press release:
January 29, 2019. With the aim of achieving the greatest possible citizen participation in the implementation process of the Law to Strengthen Public Finances, from today, Tuesday, January 29 and until next Monday, February 4, the Ministry of Finance will have available to the public the proposed "Regulation of Title 1 of Law No. 9635 of December 3, 2018, called "Value Added Tax Law" (VAT).
The tax reform law that would be approved in second debate in the coming weeks, involves the exoneration of arrears and penalties for taxpayers who pay their debts in the first three months after the publication of the law.
The proposed measure consists of exonerating 100% of the interest on arrears and up to 80% of the penalty to taxpayers who pay in the first month after the Law is published in the official newspaper La Gaceta.
The proposal to increase the tax on interest on financial investments in Costa Rica could eventually make credit more expensive for both the private sector and the government.
In the view of the National Securities Exchange (BNV) it is worrisome that initiatives such as an increase in tax on income from financial investments are being discussed without knowing in detail and clearly the impact that something like this could have on the stock market and the country's financial activities.
Lack of Internet access in some areas of Costa Rica is hindering use of the electronic receipt issuance system, which in November must be implemented by all companies.
In March the Ministry of Finance reported that between September and November of this year all companies in the country had to start using the compulsory electronic billing system.
The predictive model designed with data mining techniques used by the Ministry of Finance in Costa Rica has detected payments to third parties totalling more than $31 million.
By cross matching information from the 132 databases available to the Ministry of Finance, the Tax Intelligence Office is trying to predict which companies are more likely to evadetaxpayments, depending on their historical behavior measured through transactions, tax returns and other data. By linking together all of the information, they are identifying patterns of behavior similar to those of other companies that have evaded taxes in the past.
Between September and November of this year all companies in Costa Rica must start using the electronic invoicing system.
Those currently obliged to use the electronic billing and receipt system are companies and service providers in the sectors of health, accounting, legal, and from Monday April 2, joining them are taxpayers working in the fields of engineering, architecture and computer science and in Mayother activities such as geologists, geographers, biologists, and advertising services, among others. This obligation remains, it will not be affected by the new resolution.
In Costa Rica, the Ministry of Finance has announced that it will intensify controls on tax returns submitted by professionals in activities such as medicine, law and accounting, among others.
From a statement issued by the Ministry of Finance:
As part of the control actions carried out by the General Department of Taxation (DGT), this month a campaign was launched to monitor the professional sector which includes sending out more than 25 thousand messages.
The annual amount of the tax to be paid by legal entities starting from September 1 varies between 15% and 50% of the base salary, depending on the type of company.
From a statement issued by the Ministry of Finance:
On Friday, September 1, the collection of the new Tax on Legal Entities begins, and the collection, administration, control and collection will be from the Ministry of Finance, as of this year, according to Law 9428 that creates this Tax.
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