Tuesday 15 June 2021

‘Corporations Tax’ Amnesty For 90 Days

From September 1 to December 1, companies can take advantage of an amnesty to bring to date their payment of the ‘Corporations tax’.

The “Corporations Tax” is an annual tax for all corporate entities, akin to a ‘compulsory annual membership fee’. It is not the income tax (impuesto de renta) or other taxs based on economic activity, payable by corporations.

Corporations that are behind in payments of the tax for the periods between 2012 to 2015 can apply for the amnesty and pay only the principal of the debt, that is they will not be required to pay any penalty or interest on the outstanding amount.

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The Registro de Personas Jurídicas, del Registro Nacional, (Registry Office of Legal Entities of the National Registry) confirmed to La Nacion with respect to the the Ley del Impuesto a las Personas Jurídicas (tax on corporations), that “… the benefit (amnesty) will be maintained for a period of three months. ”

Given that tax matters are the realm of the Ministerio de Hacienda (Ministry of Finance), La Nacion reports it did not get a confirmation on the amnesty, the institution only to say the legislation does not establish any requirement for an amnesty.

“The only requirement would be to pay the debt within the period established by the regulations,” the institution said.

However, in charge of collecting the ‘corporations tax’ is the National Registry by way of the Banco de Costa Rica (BCR).

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The new Law on the tax on corporations was approved in the Legislative Assembly on March 16 of this year, replaicing, the 2010 law that was declared unconstitutional by Sala IV in January 2015, due to defects in the procedure of processing.

The new law establishes payments of the tax start this year, due on September 1 at only half the annual rate, and full rate starting on January 1, 2018.

The corporation tax is due by January 30th of every year.

What is the amount of tax payable?

The amount of the tax is established based on the legal situation and by income bracket. The tax is based on a percentage of a base salary of a public servant (for 2017 it is ¢426.200). Active corporations pay 25%, inactive 15%.

  • Thus, for 2017 period (September 1 to December 31) the amount will be prorated: active corporations will pay ¢63,930 and inactive ¢21,308.

For the 2018:

  • For active corporations with income less than ¢51 million colones, the tax is ¢106,550 a year; inactive will pay ¢35,513 colones.
  • For active corporations with incomes between ¢51 million and ¢119 million colones, the tax is ¢127,860 a year; inactive will pay ¢42,616.
  • For active corporations with incomes higher than ¢119 million colones, the tax they will pay is ¢213,100 a year; inactive ¢71,026.

Exemptions. The law exempts from the payment of the tax micro and small companies (micros y pequeñas empresas, PYMES, in Spanish) that are registered as such with the Ministry of Economy, Industry and Commerce (MEIC) and agricultural producers registered with the Ministry of Agriculture (MAG).

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According to Hacienda, INACTIVE companies are those not registered in the Single Tax Registry as taxpayers of the Income Tax …  Declarant companies – as non-taxpayers – of income tax.

Many foreigners use a coporation to hold their assets, ie cars, real estate, bank account, etc. and given that they are not active in business, erroneously beleive their corporation to be “inactive”. Click here to check on the legal status of your corporation. 

During year 1, real estate and vehicles can be transferred out of a coporation into your personal name or corporation without incurring property transfer taxes. For more information on this and the new Corporation Tax 2017 contact your lawyer.

Impact for failure to pay

Corporations that do not make the payment of the tax will be subject to a fine and interest that will be calculated per day, and that annually rate of 11.73% of the total of the tax.

In addition, corporations in default can not participate in contracting with any public institution, cannot register any document or be issued them certifications of legal status (personería jurídica) that is required for the corporation, for example, to open a bank account or contract a service.

Where does the tax money go?

The money collected for the collection of this tax will be shared between the Ministerio de Seguridad Publica (90%) – the ministry of public security that runs the national police force; the Ministerio Publico(5%) – the Judiciary; and the Organismo de Investigacion Judicial (5%), the judicial investigative police or OIJ.

Questions about the tax.

For many, foreigners and Ticos (Costa Ricans) alike, the reintroduction of the ‘corporations tax’ is is confusing and many questions that have no clear answers and misinformation.

Is it cheaper during this “amnesty period” to dissolve a corporation? I haven’t paid in years and nothing has happened to me, so whay should I pay now? What happens to my property, ie car, house, bank account, if I go too deep in default and can not afford to pay? Has anyone ever dissolved one? Any idea what it normally costs?

Use the advice and comments posted online or experiences of a friend or acquaintance, as a guide but not as fact; check it out, we strongly recommend to talk to a tax lawyer about your situation.

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We strive for accuracy in its reports. But if you see something that doesn’t look right, send us an email. The Q reviews and updates its content regularly to ensure it’s accuracy.

"Rico" is the crazy mind behind the Q media websites, a series of online magazines where everything is Q! In these times of new normal, stay at home. Stay safe. Stay healthy.

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