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Tax Payment on Legal Entities 2018 – Costa Rica

Alina Nassar with Nassar Abogados

By Alina Nassar with Nassar Abogados, in Costa Rica

As of January 1, 2018, the Costa Rican Tax Authorities began with the collection of the new Tax on Legal Entities (“Tax”). This annual tax (from January 1 to December 31) applies to all commercial companies, branches of foreign companies, their representatives and individual limited liability companies registered in the National Registry of Costa Rica.

The tax is calculated using the annual base salary established in article 2 of Law number 7337 (“Base Salary”) and it is updated every year.

• For inactive companies, the applicable tax rate will be 15% of the Base Salary, being for the year 2018, ¢ 64,650.

• For active companies (as taxpayers), the amount of the Tax is as follows:

a) 25% of the Base Salary, being ¢ 107,750, for those companies with gross income not exceeding ¢ 51,720,000.

b) 30% of the Base Salary, being ¢ 129,300 for those companies with gross income above ¢ 51,720,000 but less than ¢ 120,680,000.

c) 50% of the Base Salary, being ¢ 215,500, for those companies with gross income above ¢ 120,680,000.

• Small and medium-sized companies registered as such (PYMES, by its acronym in Spanish) will be exempt from paying the Tax.

Failure to comply with the payment could generate fines, the non-issuance of certifications or registration of documents by the National Registry of Costa Rica. Additionally, failure to pay for 3 consecutive periods will be grounds for dissolution of the company. It is important to consider that the shareholders and registered companies will be jointly and severally liable for the non-payment of the Tax.

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