What if I don’t pay my Annual Costa Rica Corporation Tax?
I get questions by email about the annual Costa Rica corporation tax that was approved in January 2012. In a past article, I explained what this corporation tax is all about and why it was created.
This is important information for most of my readers since many of you own your Costa Rica real estate in a Costa Rican corporation or S.A.
If you don’t want to run into trouble with your property own by a Costarican corporation, I recommend you read the rest of this blog.
This week, I received from one of my readers the following question:
I have noticed the following statement in your blog:
“The law allows for the corporations to dissolve automatically when the payment of the tax has three years in arrears. Could you please reconfirm this as someone told me the corporations will be struck off after TWO years (Not three years). Thank you for your time.”
As you know, I always try to stay up to date on these issues, but before I give false or misleading information, I decided to ask Costa Rica real estate lawyer and expert on these issues, Attorney Roger Petersen to give us the correct answer.
The correct answer
There are two articles in the law (law # 9024) regulating the corporation tax about non- compliance.
The first is article 5 which states that the National Registry shall not issue any certificates of corporate standing and shall not record any documents in the National Registry if the payment of the corporation tax is not up to date. As such, if you want to open a bank account and need a certificate of standing the National Registry online system will not issue the certification if the corporation has an outstanding corporate tax. If you are selling your property and the corporation has not paid the corporation tax then the registry will not record the property deed until the corporations that are parties to the sale are current in the tax obligation.
Article 6 of the law is more drastic and authorizes the National Registry to initiate the dissolution and cancellation of the corporation from the registry in those cases where the corporation is delinquent for three (3) tax periods. The National Registry would publish notice in the official Gazette that it will eliminate the corporation from the registry. In those cases where the corporation is dissolved the debt for the outstanding amounts due will become a first priority lien on any assets titled in the name of the corporation.
The next due date for the tax is January 1, 2014 and taxpayers have 30 days from that date to pay the tax. This January marks the 3rd period that the tax is applicable so it will be interesting to see how they will actually execute the dissolution and liquidation process for those corporations that have never made a payment since the implementation of the law.
If you intend to keep your corporation and don’t want any hassles then get it all paid and keep them up to date.
Thanks Roger, for the great recommendations and your expert answers!
Roger has done a very interesting and easy to follow video on how you can check on how much you owe on the Costa Rica Annual Corporation Tax.
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