Posted on August 26, 2017
Additional Corporate Tax Information
Costa Rican government finally enacted a new law creating the company yearly tax again. Such law was published on March 22, 2017, but it has a provision for which the Executive Branch became bound to publish an additional regulation defining the procedures to collect the new tax and update corporation´s data in Tax Department. For obvious reason, the tax will become in effect a few months after such regulation was published.
Because the regulation has been published, the new tax period will start to run on Sept 1, 2017. Therefore, according to the law, to avoid fines and interests, the tax corresponding to the period from Sept 1, 2017 to December 31, 2017, must be paid on or before Sept 30, 2017.
From 2018 and so on, each tax period will starts on January 1 and will end on Dec 31 of each year; and the tax must be paid on January of every year.
Now, the tricky part is that paying the tax is not the only obligation created by the law and the regulation. All corporations are obligated to update the company data in tax Department within certain period of time in order to avoid fines. Such update must be done according to the following table, based on the final digit of the respective Corporate ID (“Cedula Jurídica”):
|Periods to present Form D-140 updating corporations info in Tax Dpt.|
|Company ID ending digit||Month in which the update must be done|
All corporations doing business (also known as “Active Corporations” or “Business active Corporation”) and which has been registered as so in Tax Department Records (also known as “RUT”) will be obligated just to check if their data is up to date. If so, they are not obligated to present the form D-140 to update the data. If the info is not up to date, then, such corporations are obligated to present a form D-140 according to dates on the table above.
All corporations not doing business or which are not registered as so in Tax Department will be automatically included in those records. Therefore, since Tax Dept. is not having all the data regarding these corporations, all of them will be obligated to present the Form D-140 on the dates according to table above.
As you probably noticed, the periods to present the Form D-140 are relatively shorts, if we take into consideration that most of the people who have to sign them are not in Costa Rica and their signatures must be notarized. Validating in Costa Rica a notarization made in another country may involve a process that is a bit complicated or slow and therefore it is important to take action early to complete all the requirements on time.
Because of the above and if you desire our assistance in paying the taxes and presenting the Form D-140, we suggest to be in contact with us soon to coordinate the whole process.
Form some people is important to keep in mind other issues that we are trying to cover with some FAQs that we insert in next page.
- What if my corporation owes taxes of the ones created by the old law? There is a period of time to pay with no fines or interests?
YES. Those taxes may be paid with not fines or interest, as long as they are paid between Sept 1, 2017 and December 30, 2017.
- If my corporation was dissolved by National Registry due to the lack of payment of the old corporate tax, should I still pay them?
YES. According to the old law, even if the corporation is already dissolved, the tax may be collected directly to the legal representatives or to the corporation’s shareholders. Not to mention that if the corporation still has assets, tax department may put an embargo and collect on those assets. Therefore, in this case, it will be important to consider the option to pay those taxes before December 30, 2017 to be exempt of all fines and interests.
- If I want to dissolve a company to avoid the future payment of this tax, but there are properties or vehicles registered, may I transfer them to another company or to myself?
YES. In fact if you make such transfer within the next 12 months from Sept 1, 2017, the transfer will be a lot cheaper since you will not have to pay Transfer Tax and Registration Stamps. However, this exemption will apply only if the corporation transferring the assets has been inactive in Tax Department for at least 24 months before Sept 1, 2017.
4) If in accepted to include my name as member of the board, legal representative, Fiscal or other similar charge, but I am not really having interests in such corporation, may I renounce to avoid be obligated to cover unpaid taxes owed for such company?
YES. But you must do it within the next 24 months from Sept 1, 2017. In order to make it, you need to hire the services of a Costa Rican Notary to start the process.
5. A foreign corporation with Costa Rican corporate ID (“cedula juridica”) must pay this new tax?
YES. Any foreign corporation having a legal representation registered in Costa Rica National Registry (Registered Power of Attorney), or any branch of such company registered in Costa Rica, must pay this tax and update corporation data in Tax Department by presenting Form D-140 on the corresponding dates according the table above.
6. How much will be the yearly tax amount for an inactive corporation?
The yearly tax for these corporations is defined as 15% of the base wage for a Court officer. Since these wages change every year, the tax will vary every year.
For 2017 the base wage is ¢426,200.00. Therefore, the tax for 2017 is supposed to be ¢63,930.00 CR Colones. However, since the law become in effect on Sept 1, 2017, the tax to pay before September 30, 2017 will be ¢21,310.00 CR Colones. (Which is today approximately USD37.48 (U. S. Currency).
Please remember that this is only for INACTIVE CORPORATIONS.
7. How much will be the yearly tax amount for an active corporation?
Based on a Currency exchange rate of ¢568.50 colones per USD (Dollar) (as of Aug 19, 2017), and a Court officer base wage of CR¢426,200.00 colones (as of 2017) the tax to pay will be according to the attached pdf file.