Friday 30 September 2022

If your monthly income exceeds ¢683 thousand, you would have to pay income tax

Income tax to be paid in the future would be up to twice as high as the current, in some cases; To date, monthly incomes less than ¢842 thousand are exempt

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30 September 2022 - At The Banks - BCCR

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QCOSTARICA – The potential development of the global income tax may lead to paying more tax as monthly income thresholds are lowered or exemptions reduced or eliminated.

It’s a complete change in the income tax scheme, according to Priscilla Piedra, partner at Deloitte.

An example of the change contained in the bill currently under discussion is reducing the monthly income to paying income tax is lowered from the current ¢842,000, where below that there is no income tax, to a monthly income of ¢683,334 colones (without expenses deductibles).

This is because the exempt amount would drop from ¢10.1 million annually to ¢8.2 million and those who exceed it would pay an initial income tax rate of 10%.

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Without neglecting that, although the general business income tax rate would drop from 30% to 27.5%, for salaried and self-employed the maximum rate would increase from 25% to 27.5%.

Another controversial adjustment that the proposal would bring establishes that foreigners residing in the country pay passive income, that is, from investments, at the moment the resources enter the country, under the Dual Global Income Tax (Renta global dual).

Rafael Luna, a partner of Consortium Legal, told La Republica, he has yet to get an answer on that, explaining “it is like going to Japan, renting a car, committing an infraction and they take away my license here in Costa Rica”.

Proposed tax  on income

By standardizing the treatment between wage earners and independent professionals, once the liquid base is determined (the difference between the income received minus the authorized deductions), these rates will be applied:

  • Up to ¢5 million – 10%
  • Over ¢5 million and up to ¢12 million – 15%
  • Over ¢12 million to ¢19 million  – 20%
  • Over ¢19 million to ¢29 million – 25%
  • Over ¢29 million – 27.5%

 

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