|
By Garland M. Baker
Special to A.M. Costa Rica
There is only one tax inactive companies need to pay every year.
It is the education and culture tax. The tax is due by March 31
which falls on a Wednesday this year. However, it can be paid
anytime during the month of March.
Law 5923 requires the paying of this tax. Many people slough off
paying or do not know about it. The tax is filed and paid using tax
form D.110.
The form is easy to fill out and most banks will
accept the payment for the tax authority. A company’s net capital
amount determines the tax to be paid.
As reported on March 24, 2008, the
law has not changed significantly since 1983 when law 6879 modified it
by increasing the tax 200 percent. There are important aspects to the
law that have not changed. For example, Article 6 of the law
requires the tax department, the Dirección General de
Tributación, to publish the names of companies that do not pay
the tax on a deadbeats list in the official newspaper, La Gaceta.
Article 7 allows the tax police to collect the tax using various means
outlined under the different tax laws.
In fact, the tax department does not publish the deadbeats list nor
goes to great effort to collect the tax even though the law requires it
to do so.
Practically speaking, the now minimal tax does not justify the effort
or expense. This said, people owning companies do get collection
notices for this tax on occasion and this can be a bigger nuisance. Any
collection process in Costa Rica means there is an attorney involved
and they get their cut, so they can get pretty pushy.
This is really just a pesky tax for
inactive companies and its due date is somewhat inconvenient too.
Most relevant taxes for companies are paid in December. One can
obtain the form D.110 for free at the tax department located in Barrio
Don Bosco close to Jardines de Recuerdo or buy the form at some
national banks. The amount is from 750 to 9,000 colons, not a very big
bite.
A company
in Costa Rica is either in one of two general tax categories.
Active or inactive. Active companies are those that perform some
commercial activity and receive revenue. Inactive companies are
those that may only hold assets and only exist for that purpose. The
asset could be properties or vehicles.
Many expats confuse the two and use a company to buy a property and
then use the same company to pay their staff which usually requires a
bank account and registration with the Caja Costarricense de Seguro
Social. Once they do this, they make the company active in the
eyes of the tax authority. As it is, when opening a bank account
these days, the bank usually asks for the form from the tax department
activating the company.
An active company requires the filing of an income tax form D.101 in
December. If the form is not filed on time, a hefty fine can be
levied against the company and collected judicially including penalties
and interest.
All people with companies in Costa Rica should check each year to see
if their company is active or inactive. This can be done by going
to this link (http://196.40.56.20/ruc/#consulta)
and typing in the company's name or identification number.
|
If an inactive company is active, form D.140, "Declaración de
Desinscripción del Registro de Contribuyentes" (declaration to
unregister as a taxpayer) needs to be filed with the tax department to
put it in an inactive status.
There is one big inconvenience for people that do not pay the education
and culture tax. After a period of non-payment of the tax, there
is the possibility the tax department will delete the inactive company
from the tax rolls completely. When this happens, the company in
theory does not exist as a legal entity anymore even if it shows up at
the Registro Nacional.
Where this becomes a problem is when an expat goes to sell a piece of
property held in an inactive company and the buyer requires all the
legal paperwork up-to-date. If the company has been deleted by
the tax department, workers there will not issue a certification the
company is current.
What generally happens in these cases is that a seller needs to write a
letter to the Dirección General de Tributación requesting
the reason for the purging of the inactive company.
They begin a
study which can take as long as three months to complete only to return
with a letter stating the company was deleted because the education and
culture taxes where not paid. They can reactivate the company
after collecting all the back taxes but the process is a pain in the
neck.
Generally, what happens is a seller transfers the assets of the purged
inactive company to another inactive company so the asset can be sold
to the buyer. All of this takes time and depending on the fiscal
value of the asset being sold can be expensive because transfer taxes
and legal fees need to be paid.
Expats and Ticos alike should abide by the tax law and pay this
annoying tax. If they do not have someone monitoring their
company, like an accountant, they should add a note to their calendar
for March of each year to pay this pesky tax. By doing so, they
will avoid irritating problems when trying to transfer an asset to
another person.
Garland M. Baker is a 38-year resident and
naturalized citizen of Costa
Rica who provides multidisciplinary professional services to the
international community. Reach him at info@crexpertise.com.
Baker has undertaken the research leading to these series of articles
in conjunction with A.M. Costa Rica. Find the collection at http://crexpertise.info,
a complimentary reprint is available at the
end of each article. Copyright 2004-2010, use without permission
prohibited.
|
