By the A.M. Costa Rica staff
A ranking official of the finance ministry
said Monday that legitimate tax avoidance is a
fallacy. That was the title of a press
statement she released that maintained that
taxpayers should not put themselves above the
The official, Priscila Piedra Campos, director
general of Hacienda, asserted that “Legitimate
avoidance does not exist. If we interpret
avoidance correctly it consists in going
against the will of the law without expressly
breaking it but taking advantage that it is
impossible that the legal rules contemplate
the complexities that economic life presents.”
She was among those who attended a seminar on
the Panamá Papers last week.
Avoidance generally is considered a way for an
income earner to pay less taxes by arranging
economic affairs in a favorable way. The U.S.
Supreme Court recognized the legality of
avoidance nearly 100 years ago.
The statement is important because it reflects
the thinking within the Ministerio de
Hacienda, which collects and spends tax money.
The statement also is important for expats who
probably have substantial earnings, such as
passive income and pensions elsewhere, and pay
no Costa Rican taxes.
Ms. Piedra said that the obligation to
pay taxes does not depend on the will of the
payer because taxes are an obligation that by
living under the rules of the state the payer
has opted for a special protection for
education, the environment, health and citizen
Avoidance puts at risk the advances that the
country desires by putting the private
interest over the public one, she said.
She also branded as unfair competition the
actions of someone who would pay less taxes
than someone else similarly situated.
Even the journalistic organizations that
released the Panamá Papers note that
there are legitimate business reasons for
offshore accounts and subsidiaries.
Papers were hacked from the
Costa Rica graphic
official wants it all.
Mossack Fonseca & Co. law firm in that
country. They show extensive work by the
lawyers there to set up corporations and other
legal entities for clients in countries that
have favorable tax laws. So if an individual
receives payments to an offshore account, he
or she would pay less taxes.
The Costa Rican legislature has considered
proposals to tax the money once it is brought
into the country, but the bill has not
Ms. Piedra's comments might signal a pending
effort by the
tax ministry to make more proposals covering
foreign accounts to the legislature.
The revelations from Panamá were not new to
Costa Rican officials. Many residents here
have accounts in Panamá itself that were not
set up by the law firm that was hacked.
Some gambling operations, so called
sportsbooks, receive payment in other
countries even though the betting is handled
in Costa Rica.
And some pay their staffers with automatic
teller withdrawals from foreign bank accounts.
Such activities are well known to the
Ministerio de Hacienda but any action would
lead to long court battles and perhaps loss of
jobs for Costa Rica.
Other businesses here operate in a gray area.
Some tourist organizations accept payments in
foreign accounts for accommodations and tours
here and never report the money. Again, the
ministry is slow to uncover these cases.