By submitting to the Costa Rican Legislative Assembly a new text of the dual global income bill, the Alvarado administration intends to guarantee the tax exemptions that companies operating in the free trade zone regime already benefit from.
The dual global income bill that was sent last January 22 to the Assembly created confusion among the deputies.
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.
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.
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.
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. If the Income Tax Law is modified, the situation could change.
The Legislative Assembly approved in second debate a bill that aims to tax in the country the sale and self-consumption of imported or locally produced cement.
The initiative, which was approved in the first debate in the Assembly in mid-February and is still pending approval by the Executive Branch, establishes that the tax will be on imported cement produced nationally, in bags or in bulk, for sale or self-consumption, of any kind, whose destination is the consumption and marketing of the product nationally.
The Assembly approved in first debate a bill that seeks to tax the sale and self-consumption of cement that is imported or locally produced.
The initiative establishes that the tax will be on cement imported and produced nationally, in bags or in bulk, for sale or self-consumption, of any kind, whose destination is the consumption and marketing of the product at the national level, reported the Legislative Assembly.
Costa Rica is discussing a bill that proposes to charge an additional 0.5% on all premiums and prohibits deducting from income tax the 4% collected to finance the Fire Brigade.
For the directors of the Association of Private Insurers (AAP), the approval of the National Statistical System Bill, which is being discussed in the country's Congress, would put companies in trouble and cause a contraction in growth.
A 3% additional to the 13% VAT that was expected to be charged in Costa Rica as a tax on accommodation services provided through the Airbnb platform and other similar platforms was finally removed from the bill being discussed in the Legislative Assembly.
Bill 20.865 for the regulation of non-traditional hosting and its intermediation through digital platforms, which is discussed in the Legislative Assembly and determines the taxes to be charged for the activity, will be modified by the Economic Affairs Commission.
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.
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.
Requests have been made for the clarification of which telecommunications services are to be taxed with VAT, since it is unclear whether it is information services or telecommunications which would be taxed.
Currently telecommunications services are charged sales tax, even though the Costa Rican government aims to close the digital divide. With this new reform proposal, a Value Added Tax (VAT) of 15%, "would be incurred ...
The Institute of Chartered Accountants has stated that projects to reform VAT and income tax will affect the final consumer by making goods and services more expensive.
From a statement issued by the Institute of Chartered Accountants:
The President of the Institute of Chartered Accountants, Ovares Francisco, believes that the new bills to reform the Value Added Tax (VAT) and income tax (ISR), which the Treasury is submitting to public consultation will have a direct impact on consumers.
Public consultation is being given to the draft reform proposed by the Ministry of Finance to the Law of General Sales Tax.
From a statement issued by the Ministry of Finance of Costa Rica:
• Proposal is available to read at www.hacienda.go.cr
The Ministry of Finance today made available to the public, a proposal for draft amendments to the Law on General Sales Tax Act and Income Tax, aiming to open up a space to receive observations and recommendations from the sectors and citizens interested in participating in this process, which is needed to strengthen public finances and achieve a National Agreement for Social Development.
The reform under public consultation includes tax on remittances sent abroad, on the payment or crediting of interest, commissions and other financial expenses by natural or legal persons domiciled in Costa Rica.
From the order by the Ministry of Finance published in La Gaceta:
Amendments to the Regulations on the Law on Income Tax
As part of a plan to reduce the fiscal deficit, the Finance Ministry is preparing a bill which aims to amend the existing tax exemptions scheme.
This project also seeks to create penalties for 1,259 misuse of tax breaks reported by the Technical Services Department up until 2014. It is anticipated that the initiative will be submitted to the Legislature in no more than two weeks.