IMPORTANT CORPORATION TAX INFORMATION – Inactive & Active Costa Rican Corporations

Effective Immediately: What you Need to Know

Those companies that are behind with the tax imposed by the former law (and have not been dissolved yet by the Registry) can proceed paying the debt without interest or fines within 3 months after the law takes effect.

During the following 12 months after the law takes effect, the assets (real estate, vehicles, boats…) held by an inactive corporation can be transferred TAX FREE to any other corporation or person. This is good for the case of a person that holds 4 corporations with assets and will like to keep only 2. Transfer taxes are usually very high and this is a great chance.

During the following 24 months after law takes effect all those person that hold a POA (whether being on the board or not) can legally resign by preparing a resignation letter and visit a Notary to acknowledge letter was delivered to the company, or could not be delivered). Those members on the board without POA can resign too. Then the Registro will register such resignation and disappear their names so they can skip the responsibility for future unpaid tax.

Generals. To be paid by all corporations as well as registered branches from foreigner companies. The tax is to be paid during the month of January every year. For 2017 it needs to be paid proportional when the law takes effect (which will happen September 1st, 2017).

Tax amount. The amount for inactive companies will be lower than the tax established by the former law that ruled between 2012 and 2015, as follows:

  • Inactive: 15% of salary base = 64.000 colones =  $115 approx
  • Companies w gross income < 51 million colones= 107k colones=$192 approx
  • Companies w gross < 120 million colones =128k colones = $230 approx
  • Companies w gross income >120 million colones = 213k colones = $383 approx
Those little companies -PYMES- registered at the Ministry of Economy will be exempted.
NOTE: It is important to note that during 2017 the tax will be charged proportionally between September 1st and December 31st. So this year inactive companies will pay 21,310 colons -about US$40- and payment can be done online from your CR bank account or straight at the bank.

Solidarity. Legal representatives are personally responsible for the tax too. Legal representative means to have a POA -not necessarily to be on the board- or holding a full POA granted by the company to a person that is not on the board.

Personerias. The Registro Nacional will not issue any certifications of the company, popularly named Personerias unless the tax is paid. With the former law there was a “shortcut” by asking for a Certificacion Literal, but the new law eliminate that possibility. This is “nonsense” restriction because it might end up creating a benefit for those companies with pending debts or that have to be sued by a third party. Because such creditor or third party will have to pay the tax of the company they need to sue to be willing to present the case in Court. YES, THAT MEANS PAY IN FAVOR OF THE COMPANY THAT YOUR ARE SUING!

Dissolution. Those companies that reach 3 years without paying the tax will get dissolved by the Registry of Corporations. Any assets held by those companies will remain attached with a lien as guaranty for the payment. Stockholders will be considered responsible for the tax too. (Important to remember law 9516 published on December 20th, 2016 created the obligation to inform to Central Bank who are the stockholders of every corporation in CR, another obligation who will enter in effect when they create the system to proceed, anytime soon I guess). The National Registry recently dissolved 200K plus companies that were behind more than 3 years.

Destiny. The tax supposedly is to be given 90% to the Ministry of Security, 5% to the Jail System and 5% to OIJ Judicial Police.

Effect. The law is to take effect “3 months after the Presidential Decree to apply gets published”. The effective date is September 1st, 2017 and tax term to pay expires September 30th, after that interest will apply.

Presidential Decree. Presidential Decree 40417-H rules the way this law will be applied. Here are a few comments about it:

The Tax Ministry will include all existing corporations on a database system for the purpose of determine what is the amount to be paid. All inactive corporations will have to file a D-140 form indicating they will remain inactive. Because there are so many there will be an order according to the last number of corporate ID to comply with this.

As follows:

If your last corporate ID number ends 1 or 2= During October 2017

If your last corporate ID number ends 3 or 4= During November 2017

If your last corporate ID number ends 5 or 6= During December 2017

If your last corporate ID number ends 7 or 8= During January 2017

If your last corporate ID number ends 9 or 0= During February 2017

Not complying with filing this form will produce a fine equivalent to $400 per month delayed to maximum $2,400.

  • For new corporations being registered after the law takes effect, the Registry of Corporations will not charge automatically the tax to be paid. It needs to be paid at the Tax Ministry within 30 days from the day the Registration was requested.
  • Tax Ministry will create a system for consultation where to check if a company is up to date or not. If the company pays the tax but is behind on filing or paying rent tax, it will remain as behind status until that is paid or fulfilled too.
  • Those companies operating under Simplified Rent regime, will have to pay $192 yearly for the tax

 

By: Allan Garro

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