San José, Costa Rica, since 1956

Lawmakers look to reinstate corporate tax law

The Legislative Committee on Financial Affairs on Wednesday approved the latest version of a bill to reinstate the country’s corporate tax law, which was ruled unconstitutional last year by the Sala IV, the Constitutional Chamber of the Supreme Court.

The current bill would tax all corporations — except for micro and small businesses duly registered as such — based on their gross income. Inactive corporations with no income would also be taxed if they are registered in Costa Rica.

The highest-earning companies, those with ₡119 million or more in gross income during the previous fiscal year, would be taxed ₡212,000, or just under $400. That’s equivalent to 50 percent of the current base salary, which is set annually by the government.

Companies with income between ₡51 million and ₡119 million would pay 30 percent of the base salary or ₡127,ooo currently; and companies with income below ₡51 million would pay 25 percent of the base salary or ₡106,000 currently.

Inactive registered companies would pay 15 percent of the base salary or approximately ₡64,000.

The new formula would result in a lower tax for all but the highest-earning firms compared to the previous corporate tax law. The previously law was annulled by the court in 2015 because of unauthorized changes to the text, although the court stipulated that companies still had to pay the tax last year.

The tax was suspended this year, but if the new corporate tax bill is signed into law, companies would be expected to pay a tax for 2016 proportional to the amount of time left in the year from when the law is enacted.

The government expects to collect ₡45 billion ($84 million) in total from the tax. The Public Security Ministry would receive 90 percent of the funds, while the Judicial Investigation Police and the prison system would each get 5 percent.

Under the current bill, funds from the corporate tax could not be used to pay salaries, overtime or travel expenses.

Seven committee members approved the new draft bill while two, Libertarian lawmaker Otto Guevara and Social Christian Unity Party legislator Rosibel Ramos, voted against it.

The bill must now be approved by the full Assembly in two separate rounds of voting.

Contact L. Arias at

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The text of the article says that the corporate tax would be based on the gross income of the corporations. Then why tax inactive corporations, those used to hold title of a property or a car? It is almost certain that such holding corporations do not have any income. Properties may gain value over time, but it is unlikely that cars would do the same. I was an attorney in the US and these types of fees would not change every year, based on some judge’s salary. What a weird way of establishing fees and taxes. Lawmakers here in Costa Rica are shooting from the hip. There is no rhyme, reason or basis for many of the laws here. These laws are not interpreted the same way by various individuals working for the government either. If you ask a question to one employee and then ask the same question to another employee, one will get a different answer, depending on the day or the hour of the day. Thank God I don’t have to deal with the government every day, like I used to have to do when I was practicing law in California.

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Jill Replogle

Our apologies if there was confusion. Inactive corporations, including those with no income, would also be taxed under the proposal but at a lower rate, 15 percent.

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Do any of the readers know of any challenge to the collection of Corporate taxes under the 2011 law after the Sala IV decision?

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In January 2015 the Sala IV ruled the 2011 law providing for corporate taxes unconstitutional. Although unconstitutional (doesn’t that really mean against the law, or, illegal) Sala IV stated the 2015 taxes must be paid and those corporations who paid for the previous years are not entitled to a refund. Wow. Sort of contradictory; YOU REALLY HAVE NO LEGAL RIGHT TO COLLECT THIS MONEY BUT WHAT THE HECK, KEEP IT AND CONTINUE TO COLLECT IT. Sounds Costa Rican to me

Costa Rica needs to create a sensible corporate tax system. One that is fair and accountable. That each year a public report should be printed and made available stating the amount of corporate tax received and the detailed disbursements.

When the law makers create a sensible corporate tax system law they should also provide that previous illegal monies collected be credited to the future payments required by each corporation and to delete all claims for past payments under the illegal 2011 law. Maybe then the citizens would have more faith in the public officials.

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