Aiming reduce tax evasion by professionals, the Directorate General of Taxation (Dirección General de Tributación – DGT) is requiring professionals hand over their client list.
According to an article in La Nacion, Taxation has the power to require professionals the confidential customer information, as long as the data is not related to “professional secrecy” .
The information must be “foreseeably relevant for tax purposes,” which includes, according to the legal opinion, financial, economic and property data of customers, says the text published on the Ministry of Finance (Ministerio de Hacienda) website.
Carlos Vargas, director of the DGT, said that this delimits the professional secrecy (privileged information) with regard to the requirements of the Taxation.
“This means we can ask a doctor or lawyer for their client list and what you paid to each but are not require you to tell us intimate matters covered by professional secrecy,” said Vargas.
Professional secrecy is the obligation that certain professions have, by their very nature, not disclose to third parties, including Taxation, secrets and confidences of their clients.
With the new interpretation, however, the application range of professional secrecy for tax purposes is delimited.
For example, a doctor will have not disclose the medical nature of a visit, but, will be required to report to Taxation the name of patients, the amount and how payment was made.
While Taxation argues it will not ask for information protected by professional secrecy, the new interpretation is disputed by legal scholars because they believe violates the right to privacy information.
“The Tax Administration is carrying out incorrect and confusing technical analysis, which brings various standards without any systematization, where the only thing clear is the interest of reaching a conclusion favorable to their interests even at the expense of the law,” says Diego Salto, Specialist in Tax Law, in his column in El Financiero.
For its part, criminal lawyer Mauricio Brenes warns that professionals can be penalized if they provide intimate customer information.
“Article 203 of the Penal Code punishes with imprisonment those with legal obligation to protect secrets, reveal them. In other words, the professional who discloses information to tax authorities about accounting and tax obligations of their customers, is committing a crime, “said Brenes.
The Costa Rica Bar Association (Colegio de Abogados) believes it is inappropriate for tax authorities to request such information from lawyers, as under the existing legal system, “it is considered illegal and unconstitutional.”
For its part, the Association of Accountants (Colegio de Contadores) says that professionals a committed to a Code of Ethics, so if a CPA violates these standards he/she would be in clear breach of those rules.
In its statement, the Association said there is no law requiring a professional to provide confidential customer information.