The Costa Rica Department of Treasury has finally sorted out its inconsistency and confusion surrounding the new legal obligation for companies that are “inactive” to file a tax return. In the past, this has not been an obligation because inactive companies do not carry out any business or trade and instead, generally act as an asset holding company only. Despite this the government wants to collect all information regarding all the assets that inactive companies are holding.
For that reason, in 2019 by way of resolution DGT-R-075-2019, the government created the obligation for all “inactive” companies to file an asset declaration form. However, it never provided the public with the specific form. Instead, in 2020 they issued another resolution, No. DGT-R-38-2020 which indicated that there would not be a specific declaration form and instead all inactive companies should file a regular Income Tax Return form D-101 which is used by all companies and commercial entities that generate income.
The specific instructions provided were that: “Legal entities that have not carried out lucrative or substantive commercial activities in the fiscal period must file the sworn Income Tax return, Form D-101, established in Article 20 of the Income Tax Law, Law No. 7092 and its amendments”
Since the D-101 form is an INCOME tax declaration, the general public was confused on what information the government required for their inactive company which ironically did not generate any income. In response, the tax department responded in January of 2021 that it would defer the filing requirement until it came out with a specific form for inactive companies to file that would be simpler than the traditional D 101 income tax return filed by active commercial companies.
This new announcement would be the 3rd attempt to get this tax reporting requirement implemented. As such the tax department has now created a “Simplified Income Tax Declaration form” which the taxpayer will have access to in the ATV (online Virtual Tax Administration platform). All inactive companies must file the Simplified Income Tax Declaration form starting on January 1 – March 15, 2022.
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