QCOSTARICA – As of today, February 14, the European Union included Costa Rica in the list of countries considered ‘tax havens’, for not cooperating in tax matters.
The government of Rodrigo Chaves reports that the decision of the European Union is based “due to non-compliance with the commitment acquired by the previous government, to reform the tax system to tax extraterritorial passive income before December 31, 2022”, in other words, the country does not charge taxes to its taxpayers for the income obtained abroad or ‘global income’.
The EU considers that this is a harmful concession and must be reformed.
On Friday (February 10), Reuters reported that the European Union finance ministers would include Costa Rica, in addition to Russia, the British Virgin Islands, and the Marshall Islands to their list (created in 2017) of tax havens or ‘grey list’ on Tuesday.
“Costa Rica has a harmful foreign source income exemption regime, and it has not yet resolved this problem,” the report adds.
Those grey listed face reputational damage, increased scrutiny of their financial transactions, and the risk of losing EU funds. In addition, could face restrictions on foreign investment from some or all of the EU’s member countries.
The government indicated that the former Minister of Finance, Elián Villegas, promised to present a bill on global income and that it be approved before December 31, 2022. In addition, he revealed that this situation was not consulted with the Legislative Assembly or with the business sector.
According to the La Nacion report, Villegas claims to have left this proposal to his successor, Nogui Acosta, and that Sergio Alfaro, who was ambassador to the EU in the previous administration, mentioned the situation and the risk to today’s foreign minister, Arnoldo André, in his work report of July 2022.
Minister Acosta denies that his predecessor gave him the proposal.
The head of the Partido Liberación Nacional (PLN) legislative faction, Kathia Rivera, described the previous administration as “irresponsible” and stated that she asked the current government for explanations about the actions it has taken.
The head of the ruling party, the Partido Progreso Social Democrático (PSD), Pilar Cisneros, commented that the government will present a bill in March.
Former Minister Villegas said that the previous government had prepared a global income bill and that the current administration failed to “get it done.”
In addition, the Executive indicated that it cannot be ensured that sanctions by the States of the European Union can be avoided.
This is not the first time that Costa Rica has been included in the EU ‘grey’ list. It was taken off the list on October 10, 2019, after the Organization for Economic Cooperation and Development (OECD) considered the 2019 reform of the regime not harmful of Costa Rican free zones.
