Lawmakers pass overwhelmingly new corporate tax

As expected, lawmakers took action Monday on a plan to impose a tax on corporations to raise money for undefined security measures.

The measure passed 39 to 5 on first reading. A second favorable vote, probably later in the week will send the bill to the desk of President Laura Chinchilla for her signature.

The president sent out a Twitter message Monday night praising lawmakers for their actions.

The bill is keyed to the base salary, a concept used in many money and penal laws because the value of the colón changes. That amount now is 316,200 colons. And it will change with inflation and increases in the minimum wages.

A functioning corporation will be assessed 50 percent of the base salary. An inactive corporation will be assessed just 25 percent. Inactive corporations are those that do not engage in commerce. Many expats have placed the ownership of their home or vehicle in a corporation.

With the current base salary a functioning corporation will pay about $316.

The tax is applied to all types of corporations, including a sociedad de responsabilidad limitada, a sociedad anónima or certain other more obscure forms of incorporation contained within Costa Rican commercial law.

Small- and medium-sized firms will have the opportunity to duck the annual tax if they areregistered as such with the Ministerio de Economía, Industria y Comercio and included in the Registro Nacional de PYME Proveedoras. To do so a firm has to show that it has a limited number of employees, is current with the Caja Costarricense de Seguro Social and has paid income taxes in the past year. There is a limit on gross income, too.
The tax will not go into effect until it is signed by the president and published in the La Gaceta official newspaper. Even then the text says it will not go into effect for three months. The tax is supposed to be due in January. The bill also contained a provision for a proportional tax for 2011, but since the earliest the tax can go into effect is November, there may not be a tax this year.

Some expats may be tempted to eliminate corporations that they may have. A.M. Costa Rica has reported that this takes money, too, because a lawyer must be involved.

The bill will raise about $70 million, and the administration has not made clear exactly what it will do with the cash. There is a goal of hiring more police officers, but more police has not stopped the continuing insecurity.

Ms. Chinchilla, too, is a believer in redemption, and many of the security plans devised by Casa Presidencial include provision for reintegrating criminals back into society with jobs, training and similar.

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