January 2, 2012.

Costa Rica Legal Update

First Payment: This law goes into effect as of April 1st, 2012. Thus, Entities shall pay the tax within a 30-day period on a pro rata basis, for the remainder of this particular year. Deadline: April 30th, 2012. Subsequent Payments: This tax shall be paid on a yearly basis and starting on 2013 has to be paid no later than January 31st of each calendar year. New Entities: If an Entity is registered during a particular calendar year, it shall pay the tax upon registration, on a pro rata basis, for the remainder of that particular year.

NEW LAW No. 9024 IMPOSES NEW TAX TO ALL CORPORATIONS IN COSTA RICA

New Tax to Corporations and Subsidiaries

The Costa Rican Congress approved in its second and definitive congressional debate a new law that is going to levy a yearly tax on all Costa Rican corporations and foreign subsidiaries (hereinafter Entity(ies)) registered at the National Registry. This law intends to create additional funds to the existing programs of the Ministry of Public Safety (MSP) on citizen safety and fight against crime. In addition, it will help fund the administration and oversight of the General Directorate on Social Adaptation.

What happens if the tax is not paid?

Entities that do not pay are subject to penalties and interest. The Entity in arrears will be restricted from obtaining any certification or registration of modifications to its by-laws at the National Registry and/or engage in contractual agreements with the government of Costa Rica. If an Entity fails to pay during three (3) or more consecutive periods, the National Registry may dissolve it. All obligations created as a result of non-payment, shall constitute a lien over any assets owned by the Entity.

What type of Entities may be Taxed and How Much?

This law makes two main distinctions between (a) Entities that are Active before the Costa Rican Tax Authorities (Active Entities), and (b) Entities that are NOT Active before the Costa Rican Tax Authorities (Non-Active Entities).

a. Active Entities
Active Entities are all the registered corporations, limited liability companies, or subsidiaries and branch companies of foreign entities that are registered as tax paying entities before the General Tax Directorate (DGT) as a result of the execution of some type of commercial activity. Active Entities shall pay a tax equivalent to fifty percent (50%) of the base salary according to article 2 of Law No. 7337. This amount is approximately 180,000 colones or US$360.oo per year.

Transfer of Property
This new law allows during a 6-month transitory term to transfer between Non-Active Entities properties or assets without having to pay transfer tax or stamps.

Options Available?
At Cordero & Cordero Abogados our corporate attorneys and legal consultants can help you evaluate your particular situation in order to determine which is the best legal solution, and subsequently assist you with any of the following options: Payment of the new tax; Re-structure two or more Entities; Trust Agreements; Transfer of assets from one Entity to another; Registration as a PYMES before MEIC; Dissolution and/or liquidation of Entities.
Please contact us at:

b. Non-Active Entities
Non-Active Entities are all the registered corporations, limited liability companies, or subsidiaries and branch companies of foreign entities that are NOT registered as tax paying entities before the General Tax Directorate (Direccin General de Tributacin or DGT) as a result of the execution of some type of commercial activity. Non-Active Entities shall pay a tax equivalent to twenty-five percent (25%) of the base salary according to article 2 of Law No. 7337. This amount is approximately 90,000 colones or US$180 per year.

c. Exempt Entities
This law creates an exemption for Entities that are permanently engaging in productive activities that are registered before the MEIC and DGT as micro and small entities (PYMES). For this exemption to apply, the Entity must meet certain legal requirements and have the proper approval.

San Jos, San Jos, Costa Rica Liberia, Guanacaste, Costa Rica

Tel. (506) 2258-2525 Tel. (506) 2668-1717

mas@corderoabogados.com www.corderoabogados.com
Note: The purpose of the present publication is to provide general information on the new regulations that govern corporations in Costa Rica and it is not intended to be legal advice as such. In case more specific information is required regarding these topics, please do not hesitate to contact any of our lawyers.

When should this tax be paid?