Tuesday 22 June 2021

Costa Rica’s State Banks Want To Void Law Requiring Them To Give Part of Their Profits To The CCSS

COSTA RICA NEWS – Costa Rica’s bankers have had it, they are fighting back, appealing to the Constitutional Court to eliminate the requirement for them to hand over up to 15% of their annual earnings to the Caja Costarricense de Seguro Social (CCSS).

The petition is by the managers of the country’s public banks, arguing that the “charge” is a competition disadvantage for them compared to the private banks.

The public banks filed an action of uncostitutionality against Article 78 of the Ley de Protección al Trabajador (Worker Protection Act), enacted in 2000.

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According to the regulations, public companies and institutions must hand over part of their profits to fund the Régimen de Invalidez, Vejez y Muerte (IVM) – Disability, Aging and Death fund, of the CCSS or Caja, as it is commonly referred to.

The three state (public) banks, the Banco Nacional (BN), the Banco de Costa Rica (BCR) and Bancredito, argued January last that the obligation of handing over a portion of their earnings affects their ability to lend money and places them at a disadvantage with the private financial institutions.

The appeal is still in the “admissibility” stage at the Constitutional Court.

While the law provided for a contribution up to 15%, it was up to the Executive Branch (government) to establish the percentage based on actuarial studies of the CCSS costs.

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This was not done until 2012, when the administration of Laura Chinchilla decided that public institutions would pay 5% of earnings starting in 2013, 7% after 2015 and 15% starting in 2017. Thus the CCSS began the process of collections.

In the cases of the BCR and BN, the amount came to ¢2.425 billion colones based on the net earnings of the previous year. But the CCSS is claminig ¢3.525 billion, saying the payment by the public banks was calculated on net income (allowing for a 30% income tax), when it should be on gross earnings.

The banks protested, the CCSS is threatening legal action.

Other public companies required to make contributions include: the Correos de Costa Rica (Post Office), Refinadora Costarricense de Petróleo (Recope), Instituto Nacional de Seguros (INS) and Instituto Costarricense de Electricidad (ICE). None has so far paid the CCSS.

The banks argue that they already bear a load of 23% on net profits, reaching 33% when they payment to the CCSS is at maximum.

Marietta Herrera, legal director of the Banco Nacional, told La Nacion, “it’s a contradiction impose such obligations on banks, at a time when the government wants to emphasize the development credit.”

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The three public banks have also filed an administrative case against the government decree that set the rates it must pay, arguing that the (Chinchilla) Administration di not base the numbers on actuarial studies.

Source: La Nacion

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FACT CHECK:
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"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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