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New Corporation Tax Law Proposed for 2016

The president of Costa Rica Luis Guillermo Solís introduced bill  No. 19818 to the congressional agenda on December 2nd to approve a new version of the Corporation Tax.  The bill would completely repeal Law 9024 which was declared to be partially unconstitutional, and which resulted in the elimination of the tax starting in 2016.   Well the government does not want to lose that revenue and that is why they are now proposing this new version of the law.   Below are some summary points to the proposed new law.

GRACE PERIOD

It is worth mentioning that a three-month grace period is mentioned in the draft of the Law for all delinquent taxpayer entities, so that they can pay the amount overdue with no additional interest or fine. Furthermore, a new six-month period would be granted for entities that were inactive before the Tax during the 24 months prior to the law coming into effect to transfer the personal or real property under their name without the need to pay transfer taxes, tax stamps or registration fees.

FEES

The draft of the Law proposes the application of differential fees for the tax, depending on whether the legal persons are registered as filers or taxpayers at the DGT or not, and in case they are, resulting from the gross income filed during the previous fiscal period.

So that:

a) Corporations, branches and limited liability companies registered in the National Registry (Registro Nacional) but which are not filers or taxpayers at the General Bureau of Taxation (Dirección General de Tributación) would pay a fee equaling 15% of a base monthly wage (approximately ¢60,500)

b) Taxpayers who have filed a gross income equivalent to 250 base wages or higher –that is to say, over 101 million colones- would pay a fee equaling a 60% of a base monthly wage (approximately ¢242,000)

c) Taxpayers with gross incomes under two hundred and fifty base wages would pay a fee equaling 30% of a base monthly wage (approximately ¢121,000)

JOINT AND SEVERAL LIABILITY OF LEGAL REPRESENTATIVES

Just as under Law 9024, joint and several liability for failure to pay the tax would stay in effect for legal representatives of corporations, individual limited liability companies and branches of a foreign corporation or their representative.

PENALTIES AND FINES

The draft of the Law eliminates the penalty that precluded delinquent taxpayer entities to obtain legal status certifications from the National Registry. They would also no longer be affected by the denial of document issuance.

Collection of interests are only established as per provision 57 and Title III of the Bill of Tax Regulations and Procedures (Código de Normas y Procedimientos Tributarios), including the reduction of penalties as set forth in provision 88.

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