Can’t figure out how to stay busy over the weekend?
Well, the tax form D-151 is due by Tuesday. That should keep most taxpayers here occupied.
In Costa Rica, tax eligible individuals and corporations have to report in detail their income and expenses on this form. This is done in advance of the income tax filing deadline of Dec. 15 for fiscal year 2009-2010.
Although the Web site of the Dirección General de Tributación only says that sales or purchases that total 2.5 million colons must be reported, there is a catch. There is a far lesser threshold for rents, interest, commissions and professional fees.
The 2.5 million colon limit is about $4,965. Many companies here keep their books in both colons and dollars. So purchases from one Costa Rican-based vendor or sales to one customer during the year that reach or exceed that amount have to be reported.
But the 50,000-colon limit is just $99.30 at the current rate of exchange. So nearly all dental visits, legal consultations and medical appointments reach or exceed that limit.
Did you sell a couple of articles and photos to A.M. Costa Rica last fiscal year? If so, your name will be in the corporation report along with your identification number.
Get six or seven haircuts at a classy place? The barber has to be reported.
The tax rules only apply to those doing business here. Some tourism firms here have their affairs set up so they do all their business in another country, probably the United States or Canada. The bad news is that the U.S. Internal Revenue Service is considering adopting the same detailed reporting for firms and some taxpayers.
Tax collectors here and elsewhere lie awake at night worrying that someone is getting away with something. Penty of expats have corporations that hold title
to their cars or homes. Even if the corporation had no income, the mechanic who worked on the car or the man who painted the house might be filing the D-151 and listing the expat as having made a payment.
If the expenses are not on this form, taxpayers are not supposed to list an expense as a deduction on the income tax form. Generally tax inspectors also want to see a certified invoice or factura, too.
The situation could be worse. The legislature passed a measure that said these types of reports had to be made every three months. Tributación was slow to react and only expressed concern after the law was passed. Then it prevailed on lawmakers to postpone the major requirements of the law because the tax department just did not have resources to handle the paperwork.
The Ministry of Hacienda issued a decree that basically said it would ignore the new law.
Tributación has set up an electronic system to collect the information needed in these forms. It is the Declara system, which requires a download into a PC. Otherwise the filing has to be on appropriate tax forms and presented in person at an office of Tributación.