A.M. Costa Rica
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Time to fess up
or pay up!
By Garland M. Baker
Exclusive to A.M. Costa Rica
The Costa Rican government will
require full disclosure starting
next month of everyone’s secrets
hidden in companies.
Unless the powers-that-be change
their minds again, full
registration of all legal entities
in the country, as mandated by Law
9416, will begin on Sept. 1 and
continue through the end of
January.
The first deadline was March 1,
six months ago, to start the
process, but many business leaders
complained loudly so the deadline
was extended. There has been so
much tax news this year, it is
easy to get confused by all the
information, so an update follows
to refresh people's memories.
Law 9416 was approved Dec. 14,
2016, to require the registration
of all shareholders, beneficial
owners, and assets of all legal
entities except for ones under the
control of some governmental
institutions. The purpose of the
law is to record them all into a
big computerized database to
cross-check assets with the taxes
paid to find where illicit money
might be hidden. The registration
requirement is yearly or 15 days
after any ownership change.
The legal entities include, but
are not limited to, these legal
structures:
• Sociedad anónima (S.A.);
• Sociedad de responsabilidad
limitada (S.R.L. is also
known as L.L.C.);
• Sociedad civil (S.C. is
also known as a civil society);
• Sucursal (branch of a
foreign corporation);
• Asociación (association
of any type includes nonprofit);
• Fideicomiso (trust
except for public trusts).
The difficulty with registration
is that not just anyone can do the
filing. Only the people within an
organization and with specific
representation on the following
list are approved.
• S.A. — only the president;
• S.R.L. — any manager with legal
representation;
• S.C. — only the administrator;
• Sucursal — only representative
with full power-of-attorney;
• Asociación — administrator with
full power-of-attorney;
• Fideicomiso — trustee
To make things even harder, the
person doing the registering must
have a firma digital or digital
signature supervised by the Banco
Central of Costa Rica. Only those
with a citizenship identification
card, called a cédula de
identidad, or with a foreigner
identification card, called a
DIMEX, can qualify for one.
To clarify for those who do not
know what a firma digital is, it
is a smart card with a SIM chip on
it like the one in a cellular
telephone. It is the size of a
credit card, designed to go into a
small USB reader connected to a
computer. The card is programmed
with a person’s personal
information by an approved
organization. Banco Central has a
current list of where to get a
firma digital on their website
with contact information and
pricing. The cost ranges from $50
to $75 for the registration
process, the smart card, and the
USB reader. The information on the
website*
is only in Spanish.
There is one other option. That is
giving authority to someone who is
not part of one’s organization but
who has a firma digital. A special
power of attorney is possible for
use only in the registration
process to comply with the law.
That may sound easy enough, but
the special power must be written
into a Costa Rican notary’s legal
protocol book. That book is the
record book notaries keep, and it
is ultimately filed with the
National Archive with all other
legal recordings. Once the special
power is recorded, it is then
registered with a special
government entity at the Banco
Central called Central
Directo*. Only then
can a third-party file the
paperwork required by Law 9416 for
someone else.
A reader with legal residency and
a DIMEX card who owns a house in
Costa Rica, and that house is in
an inactive company decided to go
through the system last month to
get her firma digital. She told
her story in an interview, “It was
a little hard to get an
appointment at the Banco Nacional
because everything is done through
email which is a back-and-forth
process over days. Pablo, the man
that processed my information
spoke little English, but it was
enough to get through the
procedure. He was kind and patient
with me,” she said.
In summary, registering a legal
entity in Costa Rica is not rocket
science or brain surgery but it
does involve some pretty strict
details, as follows:
• All Costa Rican entities need to
register their stockholders,
beneficial owners, and assets with
Central Directo every year.
Central Directo is the division of
the Banco Central responsible for
Law 9416 compliance.
• Only certain individuals within
a company can legally file the
information, and they must have a
firma digital to do so.
• If a company does not have a
qualified person on its board of
directors, the company can assign
the task to another person by
giving that individual a special
power of attorney, but that person
must have a firma digital and that
authorization must be registered
by a Costa Rican notary with
Central Directo.
• Registration starts Sept. 1 and
continues through Jan. 31.
The above covers the “fess up”
part. Now for the “pay up”
component. Any entity that does
not comply with the law by Jan.
31, can be fined a minimum of
three base salaries (currently
446,200 colons or about $800) up
to one-hundred or an estimated
$80,000.
This project the government is
embarking on is overwhelmingly
ambitious. As stated in other
articles, there are an estimated
300,000 companies in Costa Rica.
50,000 are estimated defunct, and
only about 50,000 actually are
doing business. So there are about
200,000 non-active companies, many
of which hold assets and are owned
by foreigners. Most of those
people have no clue Law 9416 even
exists, and many do not speak
Spanish. Government websites like
Central Directo are only in
Spanish, and so are those offering
firma digital services. These
facts do not support the
government will be overly
successful in its endeavor without
a bunch of problems.
They may be counting on the “pay
up” equation, fining people to
death until they figure out what
is going on and comply one way or
another.
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Editor's note: Garland M. Baker is
a 47-year resident and naturalized
citizen of Costa Rica. His team
solves problems for expats. Reach
him at info@crexpertise.net.
Baker has undertaken the research
leading to his articles with A.M.
Costa Rica. Find the collection at
crexpertise.info.
A free reprint is available at the
end of each piece. Copyright 2019.
Use without permission prohibited.
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