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These stories were published Monday, Dec. 13, 2004, in Vol. 4, No. 246
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Be sure you don't toy with Tributación Directa
By Garland M. Baker 
Special to A.M. Costa Rica

Can one be thrown in jail for taxes in Costa Rica?  The answer is yes.  Articles 90 and 92 of the Code of Tax Norms and Procedures established jail terms for tax offenders.

Are many people put in jail?  The answer is no.  The whole process is new to the country.  However, with the help of the International Monetary Fund and the U.S. Internal Revenue Service, Costa Rica is getting better at collecting its taxes and prosecuting those who do not pay.

The tax department of Costa Rica, Tributación Directa, is still disorganized in many areas,  especially in the area of helpful assistance to the taxpayer.  Actually, it can be a nightmare trying to get answers to tax questions or even to find out what one owes.  This reporter waited four hours in one of those musical chair routines made famous at government offices to have someone check a company’s tax records. 

If you do not live in Costa Rica or have not had the pleasure to experience this ritual, it is where 50 or more people are sitting in chairs and, as one is called, everyone moves over a chair until one reaches the first chair.  So this reporter had to move 50 times in four hours as only one person was answering tax lookup queries.

Should one take advantage of the disorder and not file the proper forms and pay taxes in Costa Rica?  The answer is a big NO.

Everyone should do their utmost to do whatever is necessary to file all the forms required of them and to pay whatever is due the tax authority. The reason for this goes far beyond the one that come to mind — being an honest taxpayer.

No one wants Tributación Directa on his or her back.  If the agency thinks you owe them something, they are relentless.  They can be compared to the Borg in the TV series Star Trek: relentless, emotionless, cybernetic beings that roam the galaxy, assimilating entire civilizations to satisfy their pursuit for perfection. 

Nothing stops tax agents in their quest.  Not even the fact that the taxes being pursued have been paid or better yet, Tributación Directa’s own rules say something does not need to be paid. 

Tributación Directa agents will listen to nothing and no one except for a ruling from the Sala IV, the supreme court, or the Tribunal Contencioso Administrativo, Administrative Complaints Tribunal, to back off.

This is not an exaggeration; this reporter has personal experience fighting the Borg, oops, the tax department.  So far, a 7-year battle has continued over boat taxes that Tributación’s own rules state do not exist.  Not until the appeals judges of the Administrative Complaints Tribunal, ruling 516-2004 of Oct. 8, directed the tax people to abide by their own decrees was the case won.

However, showing this ruling to Tributación Directa agents regarding the exact same case of another boat means nothing to them and their pursuit to collect truly un-owed taxes continues on its sixth year.

This is the most important reason to file all the required tax forms and pay all required taxes.

Most people reading A.M. Costa Rica only hold property in corporations or limited companies and do not run for-profit business activities according to the tax authority.  There are no capital gains on asset transactions, including property sales, in Costa Rica.  Therefore, holding a property in a company and selling it for a nice profit is NOT considered a taxable activity and thus the owner does NOT need to file a yearly tax return.  The filing deadline for most companies required to file returns is Friday, Dec. 31, and the return is referred to as the D.101 Version 2.

It is very important to mention that even though there are no capital gains taxes in Costa Rica, U.S. citizens and citizens of other countries may owe capital gains taxes to their country of citizenship. 

This case was not always true. Some years back, all companies had to file tax returns, and those without economic activity were charged a small penalty. But the law was found unconstitutional and rescinded. 

Every company needs to file form D.110 in March and pay taxes on the net assets of their company.  The tax is called the education and culture tax.  The tax is small (see table) but most people do not pay it, and then they are charged interest and penalties on the tax. These extras grow geometrically.

This author’s preference is to always file all returns, including the D.101 Version 2, even if the amount is with zero balances for activity, because as Costa Rica’s tax rules change it seems as if the public is the last to know about them.

Garland M. Baker is a 32-year resident of Costa Rica who provides professional services to the international community. He can be reached at info@crexpertise.com. Baker has undertaken the research leading to these series of articles in conjunction with A.M. Costa Rica. Lic. Allan Garro provides the legal review and can be reached at crlaw@licgarro.com.
 
 

Education and culture taxes paid 
on company net assets (due in March)
book value amount owed
Net assets up to ¢250,000 ¢750
from ¢250,000 to ¢1,000,000 ¢3,000
from ¢1,000,000 to ¢2,000,000 ¢6,000
from ¢2,000,000 and above  ¢9,000
 
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Prolonged coughing may
mean you have bronchitis

By Clair-Marie Robertson 
of the A.M. Costa Rica staff 

In recent months Costa Rica has experienced changes in climate. The rainy season is now at a close, and the breezy summer has arrived. However, it seems that many people are still suffering from the effects of flu viruses, bronchitis and even pneumonia. 

Doctors are overprescribing antibiotics to patients who are suffering from flu-like symptoms and as a direct consequence; antibiotics are becoming less effective when trying to combat diseases such as bronchitis. 

Bronchitis is an inflammation of the bronchial tubes, the air passages that extend from the windpipe into the lungs. The inflammation may be caused by a virus, bacteria, smoking or the inhalation of chemical pollutants or dust. 

The first sign that you may have developed bronchitis is if you have been suffering from prolonged bouts of coughing. If you are still trying to recover from a severe cold, it’s quite possible that you may have bronchitis. 

It is possible that your coughing may only be during the times that you are trying to sleep. This is largely due to the fact that your body becomes more compressed and makes breathing even more difficult. 

Dr. José Augustin Arguedas Quesada from the Department of Toxicology and Medicine at the University of Costa Rica said that symptoms of bronchitis include a sore throat, painful sinuses, a runny nose and fever. 

Arguedas said that he agrees that doctors are over prescribing antibiotics, "…but this does not mean that this is the main cause of more cases of bronchitis."  Arguedas said that certain times of the year and changes in temperature bring about more cases of bronchitis.  The fact that the world is getting much smaller does nothing to help contain bronchitis said Arguedas, "A person could be in Costa Rica in the morning, then New York in the afternoon. This is how diseases spread so quickly." 

Acute bronchitis can last for up to 10 days. Arguedas said that the best way to combat the disease is to avoid fatigue by getting proper rest, staying indoors when the weather is cold and windy and drink large amounts of fluid to help keep the chest mucus liquefied. Congestive mucus should be coughed up, so avoid the use of cough suppressants. People who are most at risk are the elderly or those who have a history of lung disease or respiratory problems such as asthma. 

It is possible for a person to be a carrier of the virus and not actually develop bronchitis, Arguedas said. "Some people have stronger defenses, whilst others are much weaker and more prone to such diseases." 

Arguedas also said that studies carried out on old air conditioning systems in offices have proven that there is some truth to viruses being spread this way: "We cannot ignore the fact that having people working together in such close proximity is an influential factor. But sudden changes in temperature can help develop an already existing virus." 

Arguedas also said that old air conditioning systems that function by using warm water harbors the sort of bacteria that can cause viruses. In this case such air conditioners can circulate contaminated dust particles which people then breathe in. 

Parmenio murder case
hits a small snag in Heredia

By the A.M. Costa Rica staff

The Heredia criminal court has returned to the public prosecutor the set of charges leveled in the case of murdered radio commentator Parmenio Medina.

The long-awaited charges were filed with the court Tuesday. Nine persons, including a Roman Catholic priest and a prominent businessman were among those named in the hitman-style killing.

However, a spokesman for the judiciary said Friday that the Juzgado Penal de Heredia had confirmed that the files containing the charges had been returned to the prosecutor in San Joaquín de Flores who is in charge of the case.

The court said that there was uncertainty in the files as to whether the accused had been given the change to make statements about allegations of conspiracy, fraud and money laundering.

Not all of the accused are facing those charges, so it was not clear if some or all of the files had been returned.

The effect is to delay the process.

Those facing the major charges already are in preventative detention. The charges had been expected for nearly a year since agents took the Rev. Minor Calvo Aguilar and businessman Omar Luis Chaves into custody.

Parmenio Medina Pérez died when hitmen in a car fired on him as he drove to his Heredia home July 7, 2001.

The victim was the producer and principal figure in a satirical weekly radio show.

Calvo was the leading figure in Radio María, a Catholic-oriented radio station of which Chaves was the financial backer. The charges also claim Calvo and Chaves participated in fraud with the radio station as well as money laundering  and conspiracy.

Parmenio Medina in his radio show revealed troubling financial information about Radio María, which now is out of business. The Catholic Church also was listed as a victim in the prosecutors’ filing.

The Parmenio Medina case had been the nation’s No. 1 criminal case until former presidents found themselves caught in allegations of corruption.

The nation’s chief prosecutor, Francisco Dall’Anese Ruiz, took personal charge of the case as soon as he was named in late 2003. It was he who triggered the arrests of Calvo and Chaves at Christmastime that year.

The others named either are accused of participating in the murder or helping to arrange it.
 

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Reporter of C.I.A.-cocaine-contra story kills himself
By the A.M. Costa Rica staff

The California reporter whose controversial series linked the Central Intelligence Agency with the Nicaraguan contras and drug trafficking in Los Angeles killed himself over the weekend.

The allegations stemmed from the civil war in Nicaragua and Costa Rica’s role in being a drug transit point during those years.

The reporter was Gary Webb, 49, who wrote the articles when he worked in 1996 for the San Jose, Calif., Mercury News. Two years later he wrote the book "Dark Alliance: The CIA, the Contras, and the Crack Cocaine Explosion." He died in his Sacramento-area home.

Webb, a prior Pulitzer prize winner, was criticized by other newspapers after he wrote his series, and a Los Angeles County Sheriff’s Office investigation failed to find evidence of his central claim. Webb suggested that the C.I.A. deliberately targeted black neighborhoods in Los Angeles to sell crack cocaine in order to support the contras who were fighting the Sandinista government of Nicaragua in the 1980s.

Webb documented his book with more than 60 pages of endnotes, and the Mercury News series had extensive Web links to primary documents. Nevertheless, the newspaper management later disavowed his work and assigned him to a suburban bureau. This caused him to resign.

The initial news stories caused Congress to set up two investigations, and the U.S. Department of Justice to look into the allegations.

The U.S. Department of Justice said in its report : "It is difficult to discern which allegations the Mercury News intended to make, in large part because the series is replete with innuendo and implication that verge on making assertions that are in fact never made."

The Justice report, 15-months in the making, concluded "We found that the allegations contained in the original Mercury News articles were exaggerations of the actual facts."

The Justice Department investigation also dug deeply into allegations of drug trafficking by contras and links to the C.I.A. in Costa Rica. For example, there is a chapter on John Hull, the U.S.-Costa Rican land owner who set up an airstrip on his property just south of the Nicaraguan border. It is here where C.I.A. pilots ferried arms for the contras from the United States and elsewhere. The question still is open if they ferried drugs on the return route.

The department also investigated allegations that the U.S. Drug Enforcement Administration helped Hull flee Costa Rica to avoid a murder trial. Hull was investigated for the 1984 bombing that was meant to kill Eden Pastora, the leader of the Southern contras, at a farm in southern Nicaragua called La Penca. The report says that agency pilots were involved in the escape but added that the pilots said they did not know Hull was wanted.

The agency also outlined why the United States declined to extradite Hull to face Costa Rican justice. In part, the report said Rafael Ángel Calderón Fournier, the then-president, didn’t want Hull, a personal friend, brought back:

"Another matter he wanted to bring to our attention, Calderon said, is the forthcoming Costa Rican request to extradite John Hull from the United States. . . . His government has no interest in extraditing John Hull. Hull is a personal friend, whom he respects, and the executive branch has no interest in prosecuting him. Under Costa Rican law, however, the decision to request extradition is the responsibility and prerogative of the judicial branch. The executive is required to act as the judiciary's agent and has no discretion. Thus, when the voluminous request (of some 3,000 pages) is finally translated, the request will go forward."

Eight persons, including a Tico Times reporter, were killed in the La Penca explosion.

Theories abound for the reason for the La Penca assassination attempt. Those for whom Gary Webb is a cult idol generally believe Pastora was targeted because he would not participate in lucrative drug trafficking. Others blame the Sandinistas or other factions who had local political reasons.

Some blame Oliver North, President Ronald Reagan’s counter-terrorism coordinator, for originally opening up a drug corridor through Costa Rica with the goal of supporting the contras. U.S. aid, except that categorized as humanitarian, had been cut off. 

A key figure in the trafficking was the Panamanian strongman, Gen. Manuel Noriega, a known C.I.A. operative. President George Bush, a former C.I.A. director, invaded Panama in 1989 to oust Noriega.

In July 1989 then-President Oscar Arias issued a directive barring North and others from Costa Rica forever. He took the step after the Asamblea Legislativa voted overwhelmingly for the measure.

In addition to North, those barred from entering the country were Maj. Gen. Richard Secord; John Poindexter, the former national security adviser; Lewis Arthur Tambs, then the U.S. ambassador to Costa Rica; and former CIA director in Costa Rica, Joseph Fernandez.

Project Censored, the U.S. media critic, cited this development as one of the most underreported news stories of 1989.

Gary Webb mostly broke new ground in the Los Angeles area. Two Associated Press reporters wrote extensively on the Contra-cocaine connection in 1985, but their articles were not published widely.

The idea that Webb advanced, that the C.I.A. would sacrifice black children to finance an illegal war, resonated with residents of Los Angeles. There were marches and protests. 

He is survived by three children. He never held another daily newspaper job after leaving the Mercury News.


 
The other senses and their aid to our memory
Hacerle la Boca Agua

"Makes the mouth turn to water." This expression is similar to the one in English that says "makes your mouth water," and usually refers to something good to eat or the smell of good food cooking. 

However, Costa Ricans also use this dicho to express mild envy of something another person has that we find so desirable as to make our mouths water. It can be something as simple as an ice cream cone that we spy a little boy eating in the park or as grand as the neighbor’s new car or a cousin’s brand new house. 

You might also say: Se me hace la boca agua el solo pensar en el sabroso queque de manzana de mi abuela. (My mouth waters when all I do is think of my grandmother’s delicious apple pie.). So, just imaging the taste of something good could turn your mouth into water.

When I was a child, our next-door neighbor used to make the most delicious coconut cookies. I had completely forgotten all about those delightful little pastries until a few days ago when my cousin was visiting us from New York. She mentioned these famous coconut cookies, and my mouth immediately turned to water. But the thought of them also brought with it a flood of wonderful childhood memories. 

Like the famous little madeline cakes that Marcel Proust’s grandmother used to make in his epic novel "Remembrance of Things Past," smells and tastes from our past can often trigger intense memories of people, places, and events long gone. Indeed, perhaps the love of family and the warmth and happiness of holidays spent at grandma’s house are really more important than the mouth-watering smell of her apple pie, which is actually what conjures up those memories in the first place. 

We usually don’t connect the senses of smell and taste so directly with the intellect. They are thought to be on a more primitive level. But in reality they work 

The
way we say it

By Daniel Soto

together with the intellect and the emotions to create the perceptions we call reality. 

I remember once riding on a bus when a young woman got on who was enveloped in the smell of a particular kind of soap that my long-dead great aunt Estelle used to use. Immediately I was transported back to that other time, that other reality of so many years before when I used to love to visit my aunt’s house and all the wonderful fun things we would do together. 

Me hace la boca agua when I think of the apples my father used to buy me in Zapote at Christmastime. Of course, they were not the best apples in the world, and I can have much better ones today. But spending time walking through Zapote with my father and asking him to get me an apple for Christmas was such a happy carefree thing, and today it’s a warm and wonderful memory.

Of course, Zapote was not always the location of the end-of-the-year fiesta. It used to take place in Plaza Viquez. One of these days remind me to tell you the stories of my uncle Chifol’s circus in Plaza Viquez, and the sideshow with its hall of mirrors. Now that’s a memory!
 


 
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Professional quality entertainment made up for the long delay in seeing floats for the mostly young crowd. This is the presentation by those on the float for Demasa, a company that deals in corn and corn byproducts.

A.M. Costa Rica photo
Teen beer drinkers mar heavily attended festival
By the A.M. Costa Rica staff

Friday night may have been the Festival de la Luz for the youngsters, but the teenagers found it a good time to drink beer, often in public.

The resulting lack of control caused problems behind the crowds watching the annual parade of floats, bands and performers.

Despite the presence of portable toilets, public urination took place all around the center of town Friday night. One lad took advantage of the shelter of an automatic teller machine. Another found relief off the second floor of a downtown building.

Police made no attempt to prevent beer drinking even by persons obviously younger than the legal age. Other observers reported large quantities of drugs being passed and used.

As a result, the teenage set became more aggressive. One fight erupted in front of the Teatro Nacional shortly before the parade ended. Police only made five arrests, mostly for disorderly conduct, in a crowd that approached half a million lined up from La Sabana to Plaza de la Democracia.

The excesses in beer and other substances was encouraged by the parade’s late start. Although 6 p.m. was supposed to be the kickoff time, the first units did not reach the city center until nearly 9 p.m. The two hours of waiting caused some families to leave as did the nearby activities of drunken teens.

Fuerza Pública officers said they had no special instructions to lay off minor lawbreakers. However, they noted that the initiative in enforcement was with the Policía Municipal. Most police were occupied in maintaining police lines for the parade and floats.

A.M. Costa Rica photo
These revelers came prepared with cans of beer in a bag. Both youngsters and their female companions appear to be below the legal age for drinking alcohol. 

 
A.M. Costa Rica photo
The parade route was packed six deep by a youthful crowd all the way from La Sabana. 

 
 
 
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