FUTURE CHANGES IN THE COSTA RICAN TAX LAW
By Corporación Jurex S.A.
Carlos Ed. Quesada H.
Senior Partner
The
Costa Rican Government is proposing important changes on the Tax
Law through a piece of legislation know as “Pacto Fiscal”
(Fiscal Pact), that is already in process of discussion in the
Legislative Power.
If
approved, the new legislation will change many of the current
rules regarding, among others, Individual and Corporate Income
Tax, Sales Tax (now named “Value-Added Tax” or “IVA”
for its acronym in Spanish), and the taxes over the assets belonging
to Corporations and individuals.
There
are also new rules applicable to income. One of them is the “Global
Income”, which means that every person considered as “Fiscal/Tax
Resident” in Costa Rica, must declare all his/hers assets
in Costa Rica and abroad.
Will
be considered a “Fiscal/Tax Resident” in Costa Rica
any person that stays in the Country, consecutively or not, for
183 days or more a year. (From January 1st to December 31st)
New
rules are also proposed for the taxes on non-residents, including
the property of assets (land and others) in Costa Rica, and the
taxes applicable on the earnings obtained from them.
Taxes
will be calculated based upon all the assets belonging to an individual.
One of the main objectives of the changes is precisely that, along
with his corporations, the individuals will be at the end personally
responsible for the taxes.
The
new IVA will apply on all kinds of goods, including medical and
professional services that as of today are not affected by the
Sales Tax.
The
above mentioned are only some examples of the possible changes
and they are not definitive until the legislation has passed.
A
date for the approval of the legislation has not been established;
however, it is projected to be ready by December 31st, 2005.
As
the mentioned rules will vary the current tax structure, affecting
both individuals and Corporations, we recommend to our Clients
to be attentive on this issue.
If
you have any questions regarding this matter, please fill free
to contact us.
By Corporación
Jurex S.A.
Carlos
Ed. Quesada H.
Senior Partner
