The Executive Branch has submitted a new draft tax law for legal entities which corrects the articles that had led to the law being declared unconstitutional in January 2015.
From a statement issued by the President of Costa Rica:
¢45 billion is the amount of fiscal deficit which will be generated next year, if the tax on legal persons is not collected, to avoid this, the Government has submitted to the legislative process a bill on a Tax on Legal Persons, legislative record number 19,818.
With the new bill the aim is to redeploy the payment of corporation tax, which was declared unconstitutional and suspended in January.
The new initiative seeks to resurrect the creation of the tax, fees and penalties, redefining the criteria for their application. However, there are Members who do not support this measure, who assert that is mostly affects small and medium enterprises.
Lack of clarity in the text of Costa Rica’s law imposing a tax on corporations, is creating ambiguities and difficulties in collection.
The National Registry is experiencing many difficulties in implementing the collection of tax on corporations, because it lacks allocated funds to proceed, and the registry of MSMEs at the Ministry of Economy, Industry and Commerce (MEIC) is not very helpful because of its own shortcomings.
The Constitutional Court has endorsed a tax on corporations, which had been sent for review by opposition legislators.
Now the bill must go to a second debate, in order to be formally approved.
The annual tax of $300 applies to active corporations, inactive companies must pay half the amount. In turn, micro and small businesses are exempt from tax.
The government has reiterated that the new tax on corporate bodies, approved in first debate in Congress, does not apply to Micro and Small Enterprises.
The new statements come in the face of recent criticism of the bill, by some opposition representatives.
The proposal, which intends to charge a tax of $300 for corporate bodies registered as active and a $150 for those who are non active, and was approved in first reading in the Legislative Assembly and is currently being debated in the Constitutional Court.
The libertarian movement has asked the Constitutional Court to review the proposed tax on legal persons.
This request will mean a delay, of at least 30 days, in the eventual adoption of the tax which the government intends to use to raise revenue to fund security programs.
The proposal, which intends to charge a tax of $300 for legal persons actively registered and $150 to those with inactive status, is part of the tax reforms that Laura Chinchilla’s Government have sent to the Legislative Assembly for discussion and approval.
An annual tax of $312 will be created for companies, branches or representatives of foreign corporations, limited liability companies who are in active business.
The tax targets active corporations which undertake some type of commercial business. For inactive companies (not engaged in lucrative activities), the tax is $156.44.
"The bill exempts micro and small enterprises registered as such with the Registry of the Ministry of Economy, Trade and Industry, and who are registered as taxpayers with the Directorate General of Taxation.