DOING BUSINESS IN COSTA RICA

Posted By Romain Ponsot on Oct 6, 1907 in Doing Business


Date de publication : 06-10-1907

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The following information are for the sole purpose  of providing a general overview of  the local taxation of the Corporate tax aspects of the country. In any case, it can not replace a tax advice, or be considered as an official information.

 

Yes we tax in Costa Rica

 

Flash News

Costa Rica opens the negotiation with regards to a tax treaty between Costa Rica and United Arab Emirates.

Guidelines related to the transfer pricing documentation have been published.

Local tax advisors

No specific information on the local tax advisors.

Local tax administration

Ministry of Finance Website : Click here

Permanent Establishment

Subject to applicable tax treaties, the local definition of Permanent Establishment follows the definition of residence provided in the OECD Model.

Furthermore, the local tax law provides that the place where a company is registered for corporate purposes is presumed to be its tax residency if the company has its administration and control in such place.

Corporate Income Tax

Companies in Costa Rica are taxed under a progressive tax rate with a 30% marginal tax rate (for revenues up to around 190kUSD).

The following income is exempt of CIT :

  • Capital contribution in cash or in kind.
  • Reevaluation of fixed assets.
  • Profits, dividends received (participation exemption).
  • Certain capital gains derived from the transfer/sale of movable or immovable assets.

The following expenses are not deductible for CIT purposes

  • Dividends paid or credited.
  • Foreign taxes.
  • Expenses on luxury investments.
  • Certain taxes (i.e. the CIT itself, sales taxes, excise taxes,…)
  • Gifts to related parties

Carry Forward : No

Carry Back : No

Tax returns must be filed annually on a self-assessment method.

Companies shall make advance payments in March, June and September.

Whithholding Taxes (payment to foreign companies)

The local tax rates in Costa Rica are the following, subject to the provisions of an applicable double tax treaty, if any.

There is no WHT on profits derived from a branch in Costa Rica and paid to its foreign head office.

There is a 15% WHT on dividends (5% in certain particular cases).

There is a 15% WHT on Interests (exemptions in certain particular cases).

There is a 25% WHT on Royalties.

There is a 15% WHT on management fees.

There is a 25% WHT on technical services.

Capital gains

Capital gains are taxed under regular CIT.

VAT

The general rate is 13%.

There are special rates for wood and electricity.

There is no VAT refund in case where the tax payer has an excess of Input VAT.

No other specific information of VAT in Costa Rica.

Miscellaneous

Prescription is generally 4 years.

However, it can be extended to 10 years in case of fraudulent tax returns.

No specific regulations with regards to the foreign exchange control.

No specific thin capitalization rules in Costa Rica.

 

 

 

Do not hesitate to share your experience in Costa Rica with us in the comments below. Any comments are welcome !

 

Romain Ponsot

Romain est conseiller en fiscalité au sein d’un leader mondial du shipping. Grâce à son expertise tant en matière de TVA, fiscalité internationale, problématiques intragroupe qu’en matière de fiscalité des particuliers, Romain vous guidera au travers d’articles professionnels et humoristiques. 

Romain, poète dans l’âme, aime particulièrement le couscous et passe beaucoup de temps à glacer ses souliers. Profil LinkedIn
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