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Taxes on Corporations, When to Pay Them

As many of you know, Congress passed approved the bill to bring the corporate tax back to live through Law No. 9,428. The tax will be enforceable starting on September 1st, and for this current

As many of you know, Congress passed approved the bill to bring the corporate tax back to live through Law No. 9,428. The tax will be enforceable starting on September 1st, and for this current year, the payment will be prorated for the remaining months of the year.

Who should pay this tax?
The tax will be applicable to the following business structures: Sociedades Anónimas (corporations), Sociedades de Responsabilidad Limitada (Limited Liability Companies), Sociedades en Comantida (Limited Liability Partnerships), Sociedades Colectivas (Parnerships), Empresas Individuales de Responsabilidad Limitada (individual limited liability companies), among others. Failure to comply will result in a penalty of 11.73% per year which will be assessed on a daily basis.

Companies Exempt from paying the tax.
Small Businesses and farming corporations are not required to pay the corporate tax. For small businesses, they must obtain a small business designation from the Ministerio de Economía (Department of Commerce).

How much tax to pay?
The amount of tax to be paid will depend on the status of the company. Innactive companies will pay 15% of the minimum wage. For 2017 the amount will be prorated for the months between September and December, but the full amount must be paid for 2018.

On the other hand, active corporations will have to pay a tax based on their income. Please review the table below for your reference.

 

Where to pay?
This tax is to be paid at the Banco de Costa Rica. You will be able to pay it online at
https://www.bancobcr.com/ or you can pay it at any of the branches around the country. You will be able to find the branches by clicking here.

Partial payment
During 2017, only the proportion of the tax that was in force this year must be paid; which will be the period between September and December, while for 2018 the tax will be paid for the entire period of 2018 and payment must be made during the month of January.

Companies that are in arrears with the previous law (which have not paid taxes for the previous years), are not exempt from the payment of the tax, but they will not have to pay fines or interest if they pay the past due taxes within the first three months of the enforcement of the new law, which starts on September 1st.
Non-payment of three consecutive periods is a cause of dissolution and the representatives, as well as the partners of the companies, are jointly and severally liable for the outstanding tax. This is an instance under which the officers of the company and shareholders are not protected by the corporate veil.

Purpose of the law
The primary purpose of the law is finance the Ministerio de Seguridad (Department of Public Security, or police). 90% of the revenue will be allocated to the improvement of equipment, infrastructure, and personnel.

On the other hand, 5% of the total collection of the tribute will be assigned to the Ministry of Justice and Peace to support the financing of the Department of Corrections.
And finally, 5% of the proceeds will go to the Judicial Investigation Agency (OIJ) to fight organized crime.

Feel free to reach us with questions or comments. 

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rvalverde@outlierlegal.com

Attorney and Entrepreneur with more than 15 years experience in: immigration law in the US and Latin American countries including Argentina, Chile, Colombia, Brazil, Costa Rica and Panama. In addition, Rafael has extensive experience in Business Law, Estate Planning, and Real Estate. Lastly, Rafael has developed experience in people management, talent development and business development.

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7 COMMENTS
  • Avatar
    Sherry Schneider August 17, 2017

    I have read somewhere that you may transfer your inactive corporation property (i.e. house, cart, etc) to yourself personally for a limited period of time without incurring transfer costs. Is this true?

  • Avatar
    Mike August 21, 2017

    Hi maybe I missed it but I didn’t see anything as to what is the deadline for payment to avoid penalties and what is the deadline it will have to be paid by for 2018?

  • Avatar
    Victoria Horn September 13, 2017

    I understand there is a form that must be filed as well-D-140. What is this, where can it be obtained and when must it be filed?

  • Avatar
    Melissa November 1, 2018

    I’ve just put my full trust in my lawyer to get me caught up on Corp tax payments, but he included a $890 penalty for not paying 2017 until now. How did he come up with that calculation? I only own land with my corporation and no income is produced from it. Where can I look to find what the costs are?

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