Proposed law would tax all property transfer

The finance ministry is preparing a proposed law that would simplify reporting for tax purposes, double the penalties for false reporting and also apply the 1.5 percent property transfer assessment to properties that are held in corporations.

Fernando Herrero, the minister of Hacienda, outlined the changes to reporters Thursday. He said that one goal would be to bring together the rights and guarantees that taxpayers have. These rights are spread through a number of laws now.

Herrero said that the proposal would double the penalties for incorrect reporting of taxes or false reporting from 25 percent of the tax, or in some cases 75 percent of the tax, to 50 percent and in some cases 150 percent.

The property transfer tax now applies to conventional sales in which a notary prepares a document of sale for the Registro Público. Many homes, however, are held in a corporation, and frequently are sold by a simple transfer of stock certificates. Such is the case with many properties held by expats.

Francisco Villalobos Brenes, the director general of Tributación, confirmed that the legislative proposal would seek to make this type of transfer taxable, too. In the case of transactions that contain more
than real property, such as a business, taxes would have to be paid on the estimated value of the real estate transferred, he said.

Herrero is one of the driving forces in the legislature in seeking to have adopted President Laura Chinchilla’s tax reform package. That package contains a 14 percent value added tax, and had run into trouble in the legislature. Opponents have criticized the reform package as not being necessary because the nation should collect its overdue tax bills first. The measure announced Thursday would seek to do that.

The proposal also includes changes in the Dirección General de Aduanas, the customs agency. There are increases proposed here for understating the value of imported goods and other violations.

Herrero also said that the proposal would modernize the tax code so that electronic accounting systems and other technological advancements are accepted. The current law requires archaic methods with hand-written accounting books. Herrero said that a program like Quick Books would be acceptable. Most companies use these systems now.

He also said that the proposal would be submitted to Casa Presidencial Monday. Until May 1, lawmakers can consider only those measures submitted by the executive branch. President Chinchilla is expected to include this measure on her legislative agenda.

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