Q COSTA RICA — The tax seizure landscape in Costa Rica is undergoing a major shift. If Laura Fernández’s government wants to carry out seizures in a matter of weeks, rather than years, and without a judge’s intervention, it must first amend the bill it submitted to the Legislative Assembly weeks ago.
Otherwise, the initiative risks infringing on constitutional guarantees, according to several tax experts consulted.
The experts have already identified several points in the bill that should be reviewed by the legislators, including the deadlines for appeals, the non-suspensive nature of certain objections, joint and several liability, and the rules for the auction and adjudication of assets.
“In the current bill, the initial request is not subject to appeal, even though it constitutes the act that initiates the execution process and announces the immediate seizure after fifteen days. That must change; likewise, the general appeal period is three days, which could prove insufficient in complex cases or when third parties and corporate structures are affected,” explained Fabio Salas, partner in Tax and Legal Services at Deloitte Costa Rica.
Another point that must be corrected to avoid unconstitutionality is related to joint and several liability. According to Salas, the bill would allow for this condition to be declared without a prior hearing, although with a subsequent three-day appeal period.
“This joint and several liability will be decreed by the body in charge of the enforcement proceedings through a reasoned resolution, which will be notified to the interested parties without the need for a prior hearing,” explained Salas, who considers it inappropriate that the people or companies involved cannot defend themselves in a timely manner.
In essence, the new law proposed by the government must guarantee that taxpayers have the right to defend themselves in a timely manner, according to Salas.
Assets Subject to Seizure
The bill proposed by Laura Fernández’s government would transfer the collection of tax debts to the administrative process, eliminating the need for a judge’s order to execute seizures.
The aim is to combat tax evasion, and the measure allows for action against a wide range of assets and property rights.
- Cash and funds in financial institution accounts.
- Salaries, wages, and pensions, within legal limits.
- Loans, securities, and rights immediately or in the short term.
- Amounts owed to the taxpayer by third parties, including outstanding payments to credit or debit card companies.
- Revenue from public performances.
- Other movable and semi-movable property.
- Real estate.
- Commercial or industrial establishments.
- Loans, rights, and securities with long-term realizable value. Assets will be seized in the following order:
– Cash or funds in accounts held at financial institutions.
– Salaries, wages, and pensions.
– Loans, negotiable instruments, securities, and rights realizable immediately or in the short term.
– Sums of money owed to the taxpayer by third parties, including payments made with credit or debit cards. - The seizure would cover the principal and accrued interest, plus an additional 50% for future interest and costs. The bill requires seeking the assets that are easiest to sell and least burdensome for the debtor, and allows for a change in the order of seizure if the offered asset guarantees collection with equal effectiveness.