Monday 20 March 2023

These are the new reforms of the Simplified Tax Regime in Costa Rica

Reforms to the Simplified Tax Regime will come into force as of next March 1.

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18 March 2023 - At The Banks - BCCR

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QCOSTARICA – On March 1, 2023, the new reforms to the Simplified Taxation Regime of Income Tax will come into force. This was announced by the Ministerio de Hacienda (Ministry of Finance) through a publication in the official newspaper La Gaceta on February 2.

Reforms to the Simplified Tax Regime will come into force as of next March 1.

Alberto Porras, managing partner of the firm Baker Tilly Costa Rica, explained that these reforms are given through executive decree No. 43881-H. In it, adds the specialist, the requirements for the entry of taxpayers to the Simplified Tax Regime are regulated. In addition, he specifies the calculation of the tax to be paid and the dates of presentation of the declarations.

Porras also commented that among the main changes presented by this Regime are the requirements that taxpayers must meet. The first change is in the maximum amount of taxpayers’ annual purchases to remain in this Regime. This went from 150 base salaries (¢69,330,000 colones) to 186 base salaries (¢85,969,200 colones), including the Value Added Tax (VAT).

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“This means that people or taxpayers who were very close to amounts of ¢69 million in annual purchases, approximately, when this section is increased, can exceed that amount and remain in the Simplified Tax Regime without problem,” said Porras.

Another important reform, he added, is that the Ministry of Finance expanded the activities that can belong to this type of Regime. This means that many taxpayers who are currently in the Utilities Regime or, as it is popularly known, the Traditional Regime, can emigrate and transfer to the Simplified Regime, “as long as they comply with the characteristics of this type of Regime. Within this are criteria such as the number of employees, maximum assets, maximum purchases, among others,” said Porras.

Among the new activities included in the Simplified Tax Regime are:

d) Preparation and sale of all kinds of confectionery and pastry;

g) Ornamental plant nurseries, succulents, garden plants and terrarium production, except for the production of seedlings;

k) Elaboration of all kinds of jewelry; as well as its repair;

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l) Elaboration of crafts and works of art, as well as their restoration;

n) Manufacture of textile products for people, as well as their repair;

o) Manufacture of textile products and accessories for pets, as well as their repair;

r) Serigraphy services;

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s) Sublimation services.

Also, the cap on the maximum individual sale value of any unit of alcoholic beverage that exceeds 1% of the base salary is eliminated.

In the same way, with these reforms, the inclusion in the Simplified Regime is allowed for activities originating from the exploitation of a franchise, brand, trade name.

“It is important to remember that the taxpayer of the Simplified Tax Regime is not obliged to issue an electronic invoice; however, he may opt, voluntarily and exclusively, for the issuance of electronic receipts, using for this the figure of non-confirming receiver issuer,” said Porras.

To know the complete list of economic activities, such as the requirements and maximum amounts, those interested can find it in the executive decree Simplified Taxation Regime No. 43881-H at the link: /2023/02/02/COMP_02_02_2023.pdf.

“What the Tax Administration is doing is expanding the requirements of this Regime a little more so that more taxpayers can enter it,” concluded the managing partner of Baker Tilly Costa Rica.


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