Wednesday 27 January 2021

It’s January and that means it’s “tax time”!

January 2021 begins with the declaration and payment of 10 different taxes, among them taxes on real estate and movable capital income, VAT, capital gains or losses, source withholdings, and ‘luxury homes’. Non-compliance implies a penalty of up to ¢225,100 for each violation

QCOSTARICA – The first month of 2021 has a calendar abundant in declarations and payment of taxes. Ten different tax forms, in fact, must be filled out and remitted to the General Tax Office.

This is the first time that compliance with this tax is carried out on a calendar year basis, as established by the tax reform approved in 2018. Most of the filing and payment of tax obligations before the Ministerio de Hacienda (Ministry of Revenue) must be by January 15.

January has the peculiarity that, unlike other months, the payment of the tax on ‘luxury houses’, tax on corporations, the Simplified Taxation Regime, and the annual declaration of tax withholdings coincide.

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In addition, individuals and companies must complete the Value Added Tax (VAT) form, the informative declaration of VAT collection for cross-border digital services such as Uber, Spotify, or Netflix; and that of the tax on withholdings at the source such as salaries, allowances, professional services.

Withholdings to the source for remittances abroad that include profits and dividends, pensions, franchises, leases, are among the other taxes due in January.

Additionally, taxpayers must file their personal capital income tax, real estate capital, and capital gains.

These obligations were established from the Ley de Fortalecimiento y las Finanzas Públicas. (Law of Strengthening and Public Finances).

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Most of the filing and payment of tax obligations must be by January 15, except the tax on corporations that is due on the 30th, according to the calendar published on the Ministerio de Hacienda website.


Failure to submit some of the returns taxpayers are exposed to a fine of up to ¢231,000 colones-  50% of the base salary.

In addition, the taxpayer is exposed to a fine equivalent to 1% or up to 20% for each month or fraction of a month after due date, explained Francisco Villalobos, managing partner of ICS Abogados, a firm specializing in tax matters.

“In the tax on corporations, if it is not paid, it cannot be contracted with the State, nor can it obtain certifications. If it is for several years, the company is liquidated and, in practice, it is complicated, due to the assets registered in the company. It requires a liquidator, money in lawyers and Taxation can impose a lien if there are assets,” Villalobos explained.

On the other hand, March 15 is the deadline to file the income tax return for the 2020 period.

This is the first time that compliance with this tax is carried out on a calendar year basis, as established by the tax reform approved in 2018.

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Prior to that, the tax settlement was carried out on September 30 of each year.

“Accountants of the companies spent a busy December because now there is more compliance work before the tax administration,” assured the director of Grant Thornton.

Until last November, the Government’s tax collection amounted to ¢3.7 trillion colones, that is, a reduction of 12% compared to the same period in 2019.


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