With the legislative endorsement of the law against tax fraud the Ministry of Finance will be able to have access to the list of shareholders of corporations, and the people behind other legal entities.
The bill which was approved in second debate by the Legislature stipulates: an obligation to accept as a method of payment, in addition to cash, credit cards and debit cards; an obligation to be up to date with tax payments before making contracts or applying for permits, concessions or authorizations with any state institution; the introduction of penalties for tax advisers engaged in illegal maneuvers to evade or reduce the amount to be paid by taxpayers; and strengthening of the processes of judicial collection.
The Constitutional Court notes that the bill against tax fraud which aims to create a register of shareholders and preventive asset freezing, "contains no substantive defects".
From a statement issued by the Constitutional Court:
Through judgment No. 2016-15712 15:50 hrs. of October 27, 2016, the Constitutional Court ruled on the Legislative Consultation put forward by several Members on the Bill to improve the fight against tax fraud.
The legislative opposition in Costa Rica has once again submitted a replacement text for the law against tax fraud, eliminating from the project the seizure of bank accounts of companies suspected of tax evasion.
With the motion filed by the opposition deputies are aiming to prevent the Directorate General of Taxation from having the capacity to seize or ask a judge to seize bank accounts of taxpayers suspected of tax evasion.
The new draft law on tax fraud prepared by the opposition and which must be reviewed by the Ministry of Finance excludes the concept of collection and seizure by administrative authorities.
After having negotiated for the opposition bloc in Congress to amend the bill originally submitted by the Ministry of Finance, the new bill is ready and among the changes is the elimination of the incorporation of the concept of fines and embargos imposed administratively. It maintains the collection and seizure of tax debts through the courts.
In Costa Rica the majority of MPs are opposed to the bill which would give the Treasury the ability to penalize delinquent taxpayers, a measure considered unique to the judiciary.
The Government will have to amend the draft law to improve the fight against tax fraud if it wants the Legislature to approve it. The opposition is mainly relted to the fact that the project would grant the ability to make charges and put in place embargoes without a court order, and there are also "... objections to tax advisers being made to pay part of the taxpayers debts, if the Administration considers that they gave the wrong advice."
A bill to improve the fight against tax fraud authorizes the tax authorities to seize the assets and bank accounts of delinquent taxpayers, without a warrant from a judge.
An article in Nacion.com reports that the Technical Services Department of the Legislative Assembly has proposed a rule that "... could affect property rights and the privacy of individuals because it would allow Taxation officials to take possession of any money deposited in bank accounts, income from salaries and pensions. " and all this "... without a warrant, the Tax Administration would be able to seize assets and enter business establishments."
In Costa Rica a bill intends to discourage the use of "tax havens", controlling the legitimacy of the costs incurred in those territories.
At present the bill under discussion in the Committee on Financial Affairs, is expected to publicize a final report in mid-March. The initiative "... also excludes deductions for expenses to be made or paid by resident individuals or entities in tax havens."
The Vice President and the Minister of Finance have insisted that the Assembly adopt a draft law to establish global income and convert the sales tax into value added tax.
This December is the date set for the plan to convert to sales tax into value added tax (VAT) and for the first quarter of 2015, the bill on global income. Also in 2015 a draft law will be submitted on the Framework Law on Exemptions.
A draft anti tax avoidance law to be discussed by the Assembly in Costa Rica clarifies the obligation to pay sales tax on homes rented out for less than a month.
Sales tax on holiday houses rented to tourists is already covered in the General Sales Tax Act, but in practice "... this obligation is often breached by owners," affecting the formal hotel sector, which has to pay the same tax.
The business sector of Costa Rica agrees with the content of the draft law proposed by the executive branch to combat tax evasion, but points to gaps in the text.
The lack of "... clear measures on how to combat informality" is one of the shortcomings of the initiative, according to Alan Saborio, coordinator of the Tax Commission of the Costa Rican Union of Chambers and Associations of Private Enterprise (Uccaep).
The Ministry of Finance is preparing a bill that would require filing an income tax statement before applying for a loan from a bank.
The purpose of this initiative against tax evasion is for the Ministry of Finance to "... have the same status as the Costa Rican Social Security Fund (CCSS), ie that people must be up to date with payments to the institution in order to make arrangements in the public sector. "
The new Solís administration plans to establish the Value Added Tax and demand proof of tax payment for procedures in public institutions and on application for bank loans.
The tax reform being prepared includes a bill to reform income tax. This is part of a project by the Ministry of Finance which includes 55 specific actions among which are changes in the area of income, reducing government spending and control of state borrowing.