Tax Insights
from International Tax Services
Costa Rica imposes new annual tax
on corporations
April 12, 2017
In brief
Costa Rica Law No. 9428, which imposes a new annual tax on corporations, was recently published in the
Costa Rican Official Gazette. The law will take effect three months after publication of the underlying
regulations, which are still being discussed.
In detail
According to Law No. 9428,
legal entities and branches of
non-resident companies
registered with the Costa
Rican Mercantile Registry
will be subject to an annual
tax on corporations, which
will not be deductible for
corporate income tax
purposes. The new tax will
accrue annually on January 1,
beginning in 2018. For 2017,
the tax will apply on a prorata basis from the date the
law takes effect (three
months after publication of
the underlying regulations, as
referenced above). Similarly,
for newly-registered entities
in 2017 and thereafter, the
first year’s tax will apply a
pro-rata basis from the date
of registration through
December 31 of the relevant
year.
The tax generally will be due
within the first 30 days of the
following year. The annual
tax liability will depend on
whether the entity is
registered with the Costa
Rican tax authorities as a
taxpayer as well as on its
prior-year gross income, as
follows:
 Companies and branches
registered with the
Mercantile Registry but
not registered as taxpayers
with the tax authorities:
15% of the monthly base
salary (approximately
USD 118);
 Registered taxpayers with
gross income lower than
120 base salaries in the
prior year (approximately
USD 95,000): 25% of the
monthly base salary
(approximately USD 200);
 Registered taxpayers with
gross income from 120 to
279 base salaries in the
prior year (up to approx.
USD 220,000): 30% of the
monthly base salary
(approximately USD 240);
and
 Registered taxpayers with
gross income higher than
279 base salaries in the
prior year (approximately
USD 220,000): 50% of the
monthly base salary
(approximately USD 395).
For 2017, the monthly base
salary equals Costa Rican
colon 426,200
(approximately USD 790).
The Mercantile Registry will
not issue certificates and will
not register any new legal
documents if the new tax is
not duly paid. The taxpayer
also will not be entitled to
contract with any public
institutions in Costa Rica
until all amounts owed are
paid in full. Penalties (a
percentage of the monthly
base salary per month) and
interest for late payments
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also may be imposed if the taxpayer
does not pay the tax by the relevant
deadline.
Additionally, if the tax is not paid
during three successive years, the
entity automatically will be dissolved,
but the Costa Rican tax authorities
still may demand payment of the
outstanding tax liability from the
entity’s shareholders despite such
dissolution.
Observations: A previous tax on
corporations that was introduced in
2012 was declared unconstitutional by
the Costa Rican Supreme Court,
effective January 1, 2016. Thus the
evolution of this new tax should be
carefully monitored.
The takeaway
Multinationals enterprises with
operations or investments in Costa
Rica should consider how this new tax
may affect them and should closely
monitor compliance. While the
amounts of the new tax are very low in
absolute terms, the fact that not filing
the returns and paying the tax can
impact the legal status of the Costa
Rican entity and its ability to conduct
business locally is highly relevant to
multinationals with legal entities in
the country.
Let’s talk
For a deeper discussion of how this might affect your business, please contact:
International Tax Services, United States
John A. Salerno, US LATAX Leader
+1 (203) 539-5733
[email protected]
Jose Leiman
+1 (305) 381-7616
[email protected]
Lucia Echenique Fossati
+1 (646) 471-6294
[email protected]
Camila Silva Jimenez
+1 (646) 471-8794
[email protected]
Maria Bel
+1 (646) 471-1268
[email protected]
International Tax Services, Costa Rica
Ramon Ortega
+1 (809) 567-7741
[email protected]
Carlos Barrantes
+506 2224-1555
[email protected]
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