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An Overview of the Income Tax Declaration D-101

2020 has been a year of many changes in relation to tax matters. Among them, the transition of the fiscal year. As of 2021 the fiscal period will run 12 months from January to December.

2020 has been a year of many changes in relation to tax matters. Among them, the transition of the fiscal year. As of 2021 the fiscal period will run 12 months from January to December. Previously, the fiscal period in Costa Rica ran from October 1 to September 30 of each year.

How does this change affect the 2020 declarations? Well, your declarations must include the months of October to December 2019 plus the period from January to December 2020. As a result, all those registered with the Ministry of Finance must account for a total of 15 months when they file their Income Tax Returns (D-101) and Informative form (D-151). After this, the fiscal periods will once again comprehend 12 months of the calendar year.

The calculation of the Income Tax payment must be made taking into account October 2019 to December 2020.

The aforementioned changes are part of the Law for the Strengthening of Public Finances and come as a result of a governmental need to update fiscal policies and increase collection due to the fiscal deficit.

Income Tax Declaration D-101

This declaration can be filed between January 1 and March 15 of each year. All taxpayers are required to present D-101, whether they be individuals or legal entities. After the tax reform, the calculation will be made taking into account the rates that correspond to the fiscal period 2020 by subtracting expenses and costs from the gross income of the registered business activity.

It is important to mention that the return must be filed even if you did not receive income from the registered business activity or even if, following to the calculation, you do not have to pay any tax.

If after carrying out the calculation you must pay the Income Tax, you can do it online or in person, at a collection entity with banking connectivity services, such as BCR, BN, BAC San José, Coopenae and Davivienda. You only have to indicate your identification number to pay the corresponding amount, according to the previously filed D-101 declaration.

To Take Into Account

• If you are an individual with a lucrative activity and your net income is less than ¢3,732,000, you will be exempt from paying the tax. This is as long as the amount is based on 12 months. If your return is for 13 or more months, a yearly rate will be applied.

• People who have a salary or pension in addition to income from independent activities must calculate the exempt amount according to Article 16bis of the Income Tax Regulations.

• You can receive monthly Family Credits for your children and spouse.

• As of this period there will be no “referenced rates” and legal entities must pay a 30% rate.

• The rate of personal capital income will be 15% and 12.75% net for real estate capital income.

If you require more information about the tax exemption sections, check Hacienda’s site here.

It is important not to leave the declaration to the last minute, keep the previous declarations in mind, and save supporting documents. Taxpayers must know that the return implies the possibility of being audited, so they must keep everything in order.

Failure to file the D-101 may result in infractions and administrative sanctions of various levels, so we recommend that you seek advice, file, and pay on time.

 


Adriana Alpízar collaborated with this article.

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