New Tax Laws as Explained by Hacienda


Crazy New Tax Laws in Costa Rica That you Need to Know About in Plain English

 

 

Introducción / Introduction Google Translated into English

  • La ruta para el Fortalecimiento de la Hacienda Pública ya se inició. Integra, por un lado, medidas sobre las que el Ministerio de Hacienda ejerce control del gasto y por otro, medidas y controles para recaudar más recursos.
  • Incluye acciones, directrices o lineamientos presidenciales, y la presentación ante la Asamblea Legislativa de los proyectos de ley para generar mayores ingresos, mejorar los controles y limitar egresos por transferencias en pensiones.
  • Se establecieron tres fases: En una primera fase, en el año 2014 se congeló el 85% de las plazas vacantes y se recortó el 20% de los saldos presupuestarios de las partidas consideradas como gastos evitables. Se procuró mayor vigilancia en el desembolso de las transferencias corrientes a las instituciones.
  • El año 2014 cerró con un déficit fiscal menor al proyectado, gracias a las medidas de contención del gasto, la buena gestión de la deuda pública y una mayor recaudación. En total, el país dejó de endeudarse en alrededor ¢200.000 millones en el 2014.
  • Se presentaron proyectos de ley a la Asamblea Legislativa: Lucha contra el fraude fiscal y Lucha contra el contrabando, los cuales forman parte del compromiso asumido para atacar frontalmente la evasión y el comercio ilícito, mejorando así el cobro de impuestos y poniendo a pagar a quienes no lo hacen.
  • De haber sido aprobado el proyecto “Ley de lucha contra el fraude fiscal” que se discute en la Comisión de Asuntos Hacendarios de la Asamblea Legislativa, el Estado estaría recibiendo alrededor de ¢8.000 millones por mes.
  • Segunda Fase: Para controlar el crecimiento y la calidad del gasto, en el 2015 se ejecutó un recorte inicial al Presupuesto 2016 por ¢61 mil millones y se presentaron ante la Asamblea Legislativa los proyectos de ley No.19.531 y No.19.555 que tienen por objetivo ordenar el régimen de exoneraciones en el país y promover la eficiencia, eficacia y economía en la ejecución de los recursos públicos (Caja Única), así como mejorar los porcentajes de ejecución de los recursos aprobados para las instituciones.
  • Esta segunda fase, concluye con la presentación de los Proyectos de Ley de IVA y Renta. No aprobar estos proyectos, además de perder ingresos importantes que podrían destinarse a programas sociales en diferentes áreas, tales como atender necesidades de quienes menos tienen y evitarse más endeudamiento, protege al evasor, porque nos impide atacar los portillos legales y de control que permiten evadir.
  • Se tiene trazada una tercera fase con el propósito de buscar una mayor sostenibilidad fiscal en el corto y mediano plazo.

    Introducción
    / Introduction Google Translated into English
  • Introduction
    • The route for the Strengthening of the Public Treasury has already begun. It integrates, on the one hand, measures on which the Ministry of Finance exercises control of spending and on the other, measures and controls to collect more resources.
    • Includes actions, guidelines or presidential guidelines, and the presentation before the Legislative Assembly of bills to generate higher revenues, improve controls and limit outflows for transfers in pensions.
    • Three phases were established: In a first phase, in 2014, 85% of the vacancies were frozen and 20% of the budget balances of the items considered as avoidable expenses were cut. Greater vigilance was sought in the disbursement of current transfers to institutions.
    • 2014 closed with a fiscal deficit lower than projected, thanks to cost containment measures, good management of public debt and higher collection. In total, the country stopped borrowing around ¢ 200,000 million in 2014.
    • Bills were submitted to the Legislative Assembly: Fight against tax fraud and fight against smuggling, which are part of the commitment made to attack illegally the evasion and illegal trade, thus improving the collection of taxes and making payment to who do not
    • If the project "Law to fight against tax fraud" has been approved, which is discussed in the Hague Affairs Committee of the Legislative Assembly, the State would be receiving about ¢ 8,000 million per month.
    • Second Phase: To control the growth and quality of spending, in 2015 an initial cut was made to the 2016 Budget of ¢ 61 billion and bills of No.19.531 and No.19.555 were presented before the Legislative Assembly. by objective to order the regime of exonerations in the country and to promote the efficiency, effectiveness and economy in the execution of public resources (Single Fund), as well as to improve the execution percentages of the resources approved for the institutions.
    • This second phase concludes with the presentation of the VAT and Income Tax Projects. Not approve these projects, in addition to losing important income that could be allocated to social programs in different areas, such as meeting the needs of those who have less and avoiding more debt, protects the evader, because it prevents us from attacking the legal and control gates that allow us to evade .
    • A third phase has been drawn up in order to seek greater fiscal sustainability in the short and medium term.

 

IMPUESTO SOBRE LA RENTA INCOME TAX GOOGLE TRANSLATION

 

¿Cuáles son las principales novedades que trae la nueva ley del Impuesto sobre la Renta?

  • Actualiza el impuesto sobre la renta el cual tiene más de 27 años de ser emitido y que en consecuencia no refleja la realidad económica actual del país dejando exoneradas manifestaciones claras de riqueza.
  • El Proyecto se elaboró otorgándole la mayor progresividad, haciendo en consecuencia que quienes más tienen paguen más.
  • Los salarios con un exceso de ¢793.000 y hasta ¢2.103.000 pagaran entre el 10% y el 15%, la misma cantidad de impuesto que pagan hoy en día. Entre ¢2.103.000 a ¢4.205.000 pagaran 20% y por encima de ese monto se tributará 25%, estás son alícuotas nuevas por lo que a partir de estos montos se pagará un poco más de impuesto sobre la renta.
  • Se reconoce la deducción para personas físicas y asalariados, de sus pagos al seguro de enfermedad y maternidad de la Caja Costarricense del Seguro Social.
  • Con esta medida el 97% de los asalariados no sentirá ningún cambio con la nueva ley.
  • El nuevo Impuesto sobre la Renta grava con 15% las rentas de capital, como lo son por ejemplo las ganancias obtenidas por traspasos de bienes inmuebles (excepto en el caso de la vivienda habitual).
  • Se gravan con 15% las inversiones provenientes del exterior, es decir, aquellas originadas entre otras en depósitos bancarios en el extranjero, al momento en que directa o indirectamente se traigan al país.
  • El año fiscal se modifica al año calendario, es decir, del 1 de enero al 31 de diciembre.

 

INCOME TAX SPANISH -INCOME TAX GOOGLE TRANSLATION

What are the main novelties that the new law of Income Tax brings?
• Updates the income tax, which has been issued for more than 27 years and therefore does not reflect the current economic reality of the country, leaving clear manifestations of wealth exonerated.
• The Project was elaborated granting it the highest progressivity, consequently making those who have more pay more.
• Salaries with an excess of ¢ 793,000 and up to ¢ 2,103,000 will pay between 10% and 15%, the same amount of tax they pay today. Between ¢ 2.103.000 to ¢ 4.205.000 will pay 20% and above that amount will be taxed 25%, these are new aliquots so from these amounts a little more income tax will be paid.
• The deduction for individuals and employees of their payments to the sickness and maternity insurance of the Costa Rican Social Security Fund is recognized.
• With this measure, 97% of wage earners will not feel any change with the new law.
• The new Income Tax is taxed at 15% on capital income, as is the case, for example, with the gains obtained from the transfer of real estate (except in the case of the habitual residence).
• Investments from abroad are taxed at 15%, that is, those originated, among others, in bank deposits abroad, when they are directly or indirectly brought into the country.
• The fiscal year is modified to the calendar year, that is, from January 1 to December 31.

 

 

IMPUESTO SOBRE EL VALOR AGREGADO (IVA SPANISH) / VALUE ADDED TAX GOOGLE TRANSLATION

 

¿Qué es el Impuesto al Valor sobre el Agregado (IVA)?

  • Es un impuesto que sustituye al actual Impuesto General sobre las Ventas (IGV).
  • El IVA grava todas las ventas de bienes y la prestación de servicios.
  • El sistema que aplica el IVA grava cada una de las etapas de producción de bienes o de prestación de servicios, de forma tal que el productor puede deducir el impuesto pagado en cada una de las etapas en donde le añade valor a los bienes o servicios que vende o presta.

 

¿Cuáles son las principales diferencias del IVA con respecto al Impuesto de Ventas?

  • El IVA grava por regla, todas las ventas de bienes y la prestación de servicios, a diferencia del IGV que grava las ventas y por excepción algunos servicios. Esto es lo que se conoce como ampliación de la base.
  • El IVA introduce un sistema de deducción financiera plena a diferencia del IGV que tiene una deducción financiera parcial.
  • Como novedad, el IVA le será devuelto a las personas con menores ingresos y en situación de pobreza o vulnerabilidad, equivalente al 40% de los hogares nacionales.
  • Actualmente el Impuesto de Ventas es del 13% y se le aplica a los productos y algunos servicios (como los restaurantes). El IVA se le aplicará a todos los bienes y servicios (excepto algunos que quedan exentos) y será del 14% en su primer año de aplicación y de 15% en el segundo. A diferencia de lo que ocurre con el Impuesto de Ventas, que es pagado por igual por todos los consumidores, con el IVA se devolverá la totalidad del impuesto a las personas de menores ingresos y en condición de vulnerabilidad.

¿Cuál es el impacto de la aplicación del IVA en la disminución del déficit fiscal?

  • El IVA implicará contar con recursos frescos que significa un 1.33% del PIB, lo cual vendrá a aliviar en gran medida el déficit fiscal, lo cual en conjunto con las demás medidas y proyectos que se proponen provocarán que el País tenga unas finanzas más sanas.

¿Qué beneficios trae el IVA para los habitantes de Costa Rica?

  • El IVA permitirá al Gobierno tener más recursos para fortalecer la educación pública, dar mejores servicios a toda la población,  pagar deuda y hacer más obras públicas como construir carreteras, , brindar seguridad ciudadana y combatir la pobreza.
  • El IVA que se propone es sumamente innovador en el tanto incorpora un sistema de devolución de los impuestos pagados a las personas que se encuentran en condición de pobreza extrema, pobreza y vulnerabilidad.
  • Los servicios médicos y educativos privados no se verán afectados por este impuesto.

 

¿Cómo se les devolverá el impuesto a las personas de menores ingresos o en condición de vulnerabilidad?

  • El Ministerio de Hacienda hará la devolución mediante un depósito electrónico a una cuenta bancaria del consumidor. Las bases de datos del Ministerio de Hacienda y del Sistema Nacional de Registro Único de Beneficiarios (adscrito al IMAS) estarán interconectadas para estos efectos.
  • El Sistema Nacional de Información Social y Registro Único de Beneficiarios creado por la Ley No. 9137, establecerá los beneficiarios, siendo además que el Instituto Nacional de Estadística y Censo (INEC) determinará deciles nacionales de ingreso.

 

¿Por qué se le devuelve al 40% de los hogares de menores ingresos si la pobreza en el país es menor que ese porcentaje?

  • Porque también se toma en cuenta a la población vulnerable, aquella que no está en condiciones de pobreza pero que eventualmente podría caer en esa condición ante una situación adversa.

 

¿En qué otras partes del mundo ha sido aplicado este sistema, llamado IVA Personalizado?

  • Costa Rica es el primer país en aplicarlo plenamente. El primer intento fue Uruguay, pero con matices.

 

¿Cuándo comenzará a ser aplicada la devolución del IVA a los hogares vulnerables y de menores ingresos?

  • Como plazo máximo comenzará a ser aplicado 24 meses después de que la ley entre en vigencia. Mientras tanto se mantendrá la exoneración de la Canasta Tributaria de bienes y servicios establecida actualmente.

 

¿En qué beneficia a los empresarios, productores y oferentes de bienes y servicios en general?

  • El IVA es un instrumento que beneficia a las productores, oferentes de servicios y empresarios en general, en el tanto la deducción financiera permite reducir los costos al poder deducir los IVA pagados en cada fase productiva, ya que en caso contrario, esos impuestos pagados pasarían al costo, haciendo más caros los productos y servicios.
  • Con mayores ingresos, la calidad y cobertura de los servicios públicos pueden mejorar, ayuda a combatir la pobreza con mayor efectividad y, al reducir el déficit fiscal, hace más estable la situación económica general del país y brindar mejores condiciones al sector productivo y atraer inversión.

 

¿Por qué el IVA puede mejorar la recaudación?

  • El IVA amplía la gama de actividades que tributan, reduce las exoneraciones y, al gravar el valor que cada productor añade a un bien o servicio, hace necesario que las y los productores soliciten facturas a sus proveedores para acreditar el impuesto pagado y poder deducirlo.

 

¿Cuáles son algunos ejemplos de servicios que quedan exentos de pagar el IVA?

  • Quedan exentos de pagar el IVA, por ejemplo, los servicios de educación, el pago de alquileres inferiores a un salario base de referencia (¢403 400,00 correspondiente a un Oficinista 1 del Poder Judicial), el consumo eléctrico por debajo de hasta 250 Kwh, el consumo de agua potable no embotellado por debajo de hasta 30m3, entre otros.

 

¿Los profesionales liberales deben cobrar el IVA?

  • Sí. Los servicios privados ofrecidos por profesionales como abogados, médicos, dentistas, ingenieros, topógrafos, contadores o economistas, entre otros, deben cobrar el IVA. Sin embargo, estos profesionales también tendrán la posibilidad de mejorar sus deducciones de impuestos al solicitar facturas a sus proveedores.

 

¿El Estado devolverá a las personas lo que paguen en IVA en consultas médicas?

  • Sí, el Estado devolverá a las personas lo que paguen por concepto de IVA en las consultas médicas privadas, siempre y cuando lo cancelen con tarjeta de débito o crédito y no en efectivo. La devolución se hará a la cuenta bancaria relacionada con la tarjeta y no aplicará para los servicios de hospitalización y cirugía.

 

¿Es cierto que como complemento a la Ley de Renta y a la ley del IVA se incluye un impuesto verde?

  • Sí, específicamente en el proyecto de Ley del IVA se incorpora la creación del primer impuesto ambiental del país, el cual grava a los recipientes plásticos para envasar no retornables, con ¢10 por recipientes de 250 ml o su equivalente, con lo cual un envase de 250 ml pagaría ¢10 y uno de 1 litro ¢40.

 

VALUE ADDED TAX GOOGLE TRANSLATION / IMPUESTO SOBRE EL VALOR AGREGADO (IVA SPANISH)


What is the Value Added Tax (VAT)?
• It is a tax that replaces the current General Sales Tax (IGV).
• VAT taxes all sales of goods and the provision of services.
• The system that applies the VAT taxes each of the stages of production of goods or services, in such a way that the producer can deduct the tax paid in each of the stages where he adds value to the goods or services that sells or lends.

What are the main differences of the VAT with respect to the Sales Tax?
• The VAT levies, by rule, all sales of goods and the rendering of services, unlike the VAT that taxes sales and, by exception, some services. This is what is known as the extension of the base.
• The VAT introduces a system of full financial deduction unlike the IGV that has a partial financial deduction.
• As a novelty, VAT will be returned to people with lower incomes and in a situation of poverty or vulnerability, equivalent to 40% of national households.
• Currently the Sales Tax is 13% and it is applied to products and some services (such as restaurants). The VAT will be applied to all goods and services (except some that are exempt) and will be 13% in its first year of application. Unlike what happens with the Sales Tax, which is paid equally by all consumers, with VAT will be returned the full tax to people with lower incomes and in vulnerable condition.

What is the impact of the application of VAT on the reduction of the fiscal deficit?
• VAT will imply having fresh resources, which means 1.33% of GDP, which will greatly reduce the fiscal deficit, which, together with the other measures and projects that are proposed, will cause the country to have healthier finances .
What benefits does VAT bring for the inhabitants of Costa Rica?
• The VAT will allow the Government to have more resources to strengthen public education, provide better services to the entire population, pay debt and do more public works such as building roads, providing citizen security and combating poverty.
• The VAT that is proposed is highly innovative in that it incorporates a system of repayment of taxes paid to people who are in conditions of extreme poverty, poverty and vulnerability.
• Private medical and educational services will not be affected by this tax.

How will the tax be returned to people with lower incomes or in vulnerable conditions?
• The Ministry of Finance will make the return through an electronic deposit to a consumer bank account. The databases of the Ministry of Finance and the National System for the Single Registry of Beneficiaries (attached to the IMAS) will be interconnected for these purposes.
• The National System of Social Information and the Unique Registry of Beneficiaries created by Law No. 9137 will establish the beneficiaries, and the National Institute of Statistics and Census (INEC) will determine national deciles of income.

Why is it returned to 40% of lower income households if the poverty in the country is lower than that percentage?
• Because the vulnerable population is also taken into account, the one that is not in conditions of poverty but that could eventually fall into that condition in the face of an adverse situation.

In what other parts of the world has this system been applied, called Custom VAT?
• Costa Rica is the first country to fully implement it. The first attempt was Uruguay, but with nuances.

When will the VAT refund begin to be applied to vulnerable and lower-income households?
• The maximum term will begin to be applied 24 months after the law enters into force. Meanwhile the exoneration of the Tax Basket of goods and services currently established will be maintained.

How does it benefit business owners, producers and suppliers of goods and services in general?
• VAT is an instrument that benefits producers, service providers and businessmen in general, in that the financial deduction allows to reduce costs by being able to deduct the VAT paid in each productive phase, since otherwise, those taxes paid they would go to cost, making the products and services more expensive.
• With higher income, the quality and coverage of public services can improve, help to fight poverty more effectively and, by reducing the fiscal deficit, makes the general economic situation of the country more stable and provide better conditions to the productive sector and attract investment.

Why can VAT improve collection?
• VAT expands the range of activities that are taxed, reduces exonerations and, by taxing the value that each producer adds to a good or service, makes it necessary for producers to request invoices from their suppliers to credit the tax paid and be able to deduct it. .

What are some examples of services that are exempt from paying VAT?
• The following are exempt from paying VAT, for example, education services, the payment of rents lower than a reference base salary (¢ 403 400.00 corresponding to a Clerk 1 of the Judiciary), electricity consumption below 250 Kwh, the consumption of non-bottled drinking water below up to 30m3, among others.

Do liberal professionals have to charge VAT?
• Yes. Private services offered by professionals such as lawyers, doctors, dentists, engineers, surveyors, accountants or economists, among others, must charge VAT. However, these professionals will also have the possibility to improve their tax deductions when requesting invoices from their suppliers.

Will the State return to people what they pay in VAT in medical consultations?
• Yes, the State will return to people what they pay for VAT in private medical consultations, as long as they cancel it with a debit or credit card and not in cash. The refund will be made to the bank account related to the card and will not apply for hospitalization and surgery services.

Is it true that a green tax is included as a complement to the Income Law and the VAT law?
• Yes, specifically in the draft VAT Law incorporates the creation of the first environmental tax in the country, which is levied on plastic containers for non-returnable packaging, with ¢ 10 for 250 ml containers or its equivalent, with which a 250 ml container would pay ¢ 10 and one of 1 liter ¢ 40.

 

Crazy New Tax Laws in Costa Rica That you Need to Know About

  • By Allan Garro – June 11, 2019
  • t’s no surprise that Costa Rica isn’t in the best financial shape. Costa Rican Congress approved a new tax package called “Law of Strengthening of Public Finances number 9635”. Guess what this means……more taxes. Within the new taxes commencing July 2019 Hacienda will expand the number of products and services that will be taxed with IVA or “Value Added Tax”, which is essentially a sales tax on steroids. Capital gain taxes are also coming when selling real estate property plus a “surprise”  for inactive companies holding assets in them.

    Starting July 1st, many professional services will be taxed with VAT. So now the lawyers, engineers, consultants and all kinds of independent professionals will be obliged to include an additional 13% onto the invoices they issue. As for insurance policies, most of the general insurance premiums are already taxed with VAT, so they will not suffer much change. Personal insurances will have an increase of 2% and Occupational Risk insurance and insurance that covers homes with a value of less than 58 million colons -approximately US $100K- will be exempt.

    All commercial property rentals will suffer an increase of 13%. As for housing rents, only those whose amount exceeds 670,000 colons – approximately US $ 1,145 – will have to pay an additional 13% VAT. Airlines tickets whose origin or destination is Costa Rica, as well as private health services will pay an additional 4%. The tariff of 13% for water consumption will apply when the consumption exceeds 30 cubic meters per month and the electricity VAT will be charged where consumption rates are greater than 280 kilowatts/hour.
    As for the capital gains tax, if a real estate property is sold after July 1, the tax must be paid and there will be two options to calculate it: 15% on the profit or 2.25% on the total sale value. According to the tax authorities, to be able to apply 15% on the profit (difference between the acquisition value and the sale value), the seller must demonstrate the purchase value. This means more paperwork and work. Once the acquisition value is reached, it must be updated with the consumer price index of the INEC (Institute of Statistics and Census) and the improvements and investments made can be deducted.

    If seller prefers to skip the paperwork required to demonstrate the purchase value they can choose a flat rate of 2.25% over the total sale value to proceed paying immediately. This new tax is added to the current costs generated by the sale of a real estate property, which are usually transfer taxes for approximate 2.5%, real estate agent’s commission usually 5% and lawyer fees that vary between 1% and 2%. Once the first sale happens after this amendment, that purchase price will now have a record kept to calculate the tax and property tax in the future.

     

    Now to the change that can take the owners of inactive companies by surprise. The new law establishes that both active and inactive corporations must submit income tax returns. Although for the case of the inactive, the income tax payable would be zero, here is the catch: if the amount of capital stock differs from the value of the assets that it has in its name, the company is at risk of an unjustified capital increase. This empowers the Ministry of Finance to consider that it generates an increase in the taxpayer’s income, which generates an increase in gross income.

    For the tax authorities there are two types of unjustified capital increases: internal and external. The internal is when there is a difference in value between assets and equity, or the existence of nonexistent liabilities. The external ones are those that a taxpayer does not declare and are discovered later, as a society that has assets in another country. Therefore, it would be advisable to at least make an adjustment in the amount of capital stock so that there is no large difference in relation to the assets it has as inactive company. And check the possibility to find records of the origin of the funds.

    Certainly, there are many inactive corporations that have a stock capital of less than US $200 but have assets with a value of hundreds of thousands or millions of dollars, and this may become a real problem in the future. It is better to take precautionsand avoid charges, fines, interest along with many headaches. It is time to learn how Costa Rica is changing and to take precautions accordingly.

    About the Author: Allan Garro was incorporated as a lawyer and public notary in 1996. He specializes in Litigation, Corporate, and Real Estate Law. He has also acted as an external legal consultant to Congress. He has been the author of more than 100 published English Language articles and can be reached at allan@garrolaw.com