Costa Rica´s Best Guide Online Magazine

company ´ s assets, passive and capital equity. The provision of this information on a yearly basis has become relevant to CR Revenue, for the purpose of enforcing capital gains tax under the scenario of a future sale of a company asset, if applicable. The procedure and online tools to process this declaration are very cumbersome and challenging for foreigners who, do not have CR residency and a tax payer id number and online user name and password to the online processing system: ATV on the CR revenue website, therefore it is strongly advised to hire an accountant or business lawyer with a tax power of attorney, so they can produce the tax payer registration process (D 140) and the yearly income tax declaration D101. The penalty for not filing this declaration is approximately a half salary of admin clerk as indicated earlier and the entity can also become frozen or immobilized before the National Registry.

cumbersome money laundering laws of CR, that regulate any wire or transaction above USD10,000; but this has nothing to do with banking as a company or as a physical person. regulatory compliances: as of NOVEMBER 2022, three tax related regulatory compliances are mandatory on a yearly basis, for the existence and operation of a corporation or an LLC: a) Corporation or Company tax: this is a flat rate, tiered company registration tax, proportionate to a percentage of the base salary of an administration clerk (usd800 approx.), which for non-active entities that own real estate passively, is currently about USD120 due in FEBRUARY each year. The applicable law is Law of Juridical Persons ´ Tax number 9428 (and its precedent repealed Law number 9024), it establishes the obligation to pay the tax during the month of February each year, late payment or lack of payment results in administrative immobilization i.e. the company becomes “frozen” by the Mercantile Registry and, on the 2nd or 3rd year of tax arrears the Registry dissolves the entity administratively and puts a tax lien or “hipoteca legal” on the assets owned by the company in the National Registry: land or cars for example. The solution to this problem is to pay the taxes in arrears with interests and either: i) apply for a company re inscription or reinstate its legal validity before the Mercantile Registry, through the means of execution of a petition by the company director or all share- anti – 3. Tax related

holders, before a CR Notary Public who files and records the petition; or ii) to appoint an Executor for the company ´ s liquidation with authorization to sell or allocate company assets. b.) Non – active company income tax declaration: while previously to 2022, non-active (basically non-income generating) companies or corporations were regarded as irrelevant for the Costa Rica Revenue administration (www.hacienda.go.cr), which only dealt with tax active companies which executed or performed active economic business like run a hotel, bar, restaurant or store; this scenario changed with the introduction of the capital gains tax and capital rents tax, under the law that reformed the CR Income tax law: Law for Strengthening of Public Finances Law number 9635 of DEC 2018 and its simplification Law number 10160 of MARCH 2022, which amended article 2 of the Income Tax Law of Costa Rica, to include non-active companies or corporations, as actual tax payers with the obligation to declare yearly in MARCH a simplified version of the income tax return or declaration D101, to include a summary of the

CONTINUED on Page 110...

COSTA RICA´S BEST GUIDE