Some 4,061 firms already have registered as a micro, small or medium-sized enterprise and the first two categories will be exempt from the new tax on corporations approved on first reading by the legislature Monday.
In anticipation of a flood of applicants, the Ministerio de Economía, Industría y Comercio outlined the requirements Tuesday.
Registering with the ministry would seem to be a good deal for any small business. Not only will the operators not have to pay the estimated $316 annual tax, but the government has set up a number of programs for small business, including cut-rate loans.
Individuals can register, too, but as of now persons in business will not be obligated to pay the tax that is just for corporations. The ministry said Tuesday that there are 77 business persons who have registered.
The programs for small business are nine years old, but they are in the news now because the firms can duck the new tax, which will be assessed beginning Jan. 1, according to a statement Tuesday by Casa Presidencial. The tax will have to be paid within the first 10 days of the month, according to the text.
Law 8262 and regulations issued in a decree published in May 2002 establish the ground rules for being a micro, small- or medium-sized business eligible for government assistance. In Spanish these firms are known aspequeñas y medianas empresas and frequently referred to as PYMES.
Enrollment can be done in person at ministry offices or via the Internet at a special Web page. The key requirement is that the firm actually has to be in business, agricultural, industrial or commercial. And it has to have met its obligations with the government.
This includes being enrolled at Tributación Directa as a tax-paying entity, being enrolled with the Caja Costarricense de Seguro Social for employee benefits and holding a valid workmen’s compensation policy, known as riesgo de trabajo insurance, for employees.
A decree listing regulations says that a firm has to be in business for six months and that the operator has to have two years experience in the business that is being undertaken.
The regulations also contain elaborate mathematical formulas to determine if a firm qualifies. The formula awards points based on the number of employees and the gross income of the enterprise. The formula also determines if the enterprise is a small business. Medium-sized businesses still will pay the tax.
The rules also say that no more than 25 percent of the ownership of an enrolled firm can be in the hands of a large company.
Generally a micro enterprise is one with five or fewer employees. Small firms have from six to 30 workers, and a medium firm can have up to 100 employees.
Ministry workers are also going to want to see a copy of the most recent tax return to assess the gross income of the firm. Most firms operated by expats are well within the eligible range.
Once a firm is certified as a micro or small operation, the ministry will send the notification to the Registro Nacional, the agency in charge of collecting the tax.
Expats who have inactive corporations will only be paying one half the amount paid by an active corporation.
Technically that will be 25 percent of a base salary, which is now 316,200 colons. A base salary is used for taxes and for court fines to adjust the amount for any inflation in the colón. So the holder of an inactive corporation will pay about 79,000 colons or about $158.
Many expats hold cell telephones, cars and houses in inactive corporations.
With the current base salary, a functioning corporation will pay about $316. Considering the paperwork and expense involved, an expat would have to think long and hard before trying to turn an inactive corporation into an exempt micro or small enterprise just to duck the annual fee.
The ministry noted that enrollment as a micro, small or medium business has to be done each year. Day-to-day involvement with small business is by the Dirección General de la Pequeña y Mediana Empresa at the ministry. Registration is possible HERE.
Casa Presidencial said that the new tax in addition to providing funds to ease the country’s financial situation also controls the creation of corporations which are used many times for evasion.
The legislative leadership said that the final vote on the bill will be Thursday. Lawmakers said that there are 532,870 corporations of various types listed in the Registro Nacional. Some 31,373 are micro, small and medium-sized firms.
Lawmakers said that 95 percent of the money raised will go to the Ministerio de Gobernación, Policía y Seguridad Pública for more resources. Some 5 percent will go to the Ministerio de Justicia y Paz, which operates the prisons.
Officials expect to raise $72 million.