Corporation Tax Costa Rica 2016 – wondering what will happen with it?
Is your property in Costa Rica owned in a corporation? You might have heard some stories about the Corporation Tax in Costa Rica but you don’t really know what is going on? Do you want to know what will happen to the corporation tax in Costa Rica for 2016?
Some owners of property in Costa Rica don’t even know that a corporation tax (impuesto sobre sociedades mercantiles) was created in December 2011 through tax law No 9024.
The existing corporation tax law No 9024 was declared unconstitutional in the Costa Rican Constitutional Court in 2015, annulling the collection of this tax for 2016. The corporation tax funds usually go to the Public Security Ministry, the reason we already knew the government was not going to let it go so easily.
Nonetheless, the obligation of paying the tax from 2012 – 2015 and its penalties still exists and the Costa Rican government already started the collection process of the corporate tax due. The corporations that are not current on their corporate tax payments, will be published in the Governmental newspaper La Gaceta and will be given 15 days after the publication to pay what they owe.
In September 2017, the new Corporation Tax Law was approved by Congress and 2015 – September 2017 must be paid. For 2018, the tax was lowered. Corporation Tax form D-140 must be filled out and deliver to the tax office during 2018, depending on the last digit of your corporate ID number. Please read my latest update from February 2018 on the American European blog.
Confiscation of assets
Those corporations, who have not paid the corporation tax including 2015, run the risk of confiscation of the company’s assets and legal representatives will be fully responsible for what is owed. For 2015, the tax charges were ¢201.700 annually for active corporations and ¢100.850 for the inactive. Those corporations that not have paid the tax for 3 consecutive years could be automatically dissolved by the Costa Rican government (and losing their assets), but the tax debt will still be owed by the legal representative.
Corporation tax is not the same as profit tax or income tax for corporations. The Corporation tax is a fixed annual fee that you pay to have a corporation. If the corporation is used, the tax is a bit higher than for a dormant corporation. Functioning corporations also pay income tax, unless it is used to only hold assets such as real estate or vehicles.
Waiting for new corporation tax law
You do not have to pay the 2016 corporation tax until the government will get the new tax law approved! The government has already submitted a new law to congress to replace the old Law No. 9024 and it is just a matter of time before it will be approved. Meanwhile, property owners who have not paid the outstanding corporation tax, need to pay the tax up to date to be able to sell the property in Costa Rica, be able to get a mortgage on it, or when you need a legal document such as a personería juridica (a legal document from the National Registry or a notary public that proves you have the powers of attorney of the corporation).
How to check what you owe?
You don’t know if your corporations are up to date or not? You can check at the National Registry where you have to register first as a user (on the left) and if you are already a registered user, use your user name and pasword on the left and click “ingresar” and when a new window opens, go to where I show the arrow at “impuesto personerías jurídicas”, which will take you again to a new window where you can type in the corporate ID number of your corporation. You can either pay online through your Banco de Costa Rica account or in person at any Banco de Costa Rica agency. I’m sorry it’s so difficult but I’m sure it’s taken someone at least a year to set this up this way LOL.
How to dissolve your unused corporation
If you still own a corporation but you are not using it and don’t want to keep paying the corporation tax every year, read this article carefully.
If you don’t know what to do, contact your attorney. If you are planning to purchase property in Costa Rica, ask your attorney about the advantages and disadvantages of holding your assets in a corporation and what your options are.
To check when taxes in Costa Rica should be paid and which ones, click here.
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