Tax on corporations hits new legislative roadblock

A proposal to assess an annual tax on corporations ran into another problem in the legislature Tuesday.

Juan Carlos Mendoza García, president of the Asamblea Legislativa, confirmed during Tuesday’s afternoon legislative session that 12 lawmakers have signed a request to send the measure to the Sala IV for judicial review.

Other lawmakers noted that this means a second vote on the tax measure will be put off until the court makes a decision and formally notifies the legislative leadership. Because 45 lawmakers did not sign the request suggests that the measure may get their votes when it is returned. That is enough to pass the bill.

This is the estimated $316 tax on active corporate entities. Monday the measure was sent back to committee for revision. Now the Sala IV constitutional court will review it for legal technicalities. One point will be if the Registro Nacional can be given the job of collecting a tax as the bill now provides.

The Movimiento Libertario has opposed the measure and lawmakers from that party were among those who signed the request for a high court opinion.

The bill is of high interest for some expats because many hold property in corporations to protect their
personal assets and to make sales easy and without transfer taxes.

There is an additional complication based on the technicalities of the Costa Rican constitution. The corporate tax bill has a high priority now because the executive branch has designed it as a high priority item. During August, the Presidencia controls the legislative agenda. But after Aug. 31, the bill may become lost among the other actions of the Asamblea Legislativa.

Lawmakers already have approved it on first reading. The second vote would have been final, but that seems to be put off for at least a couple of weeks. Sometimes the Sala IV takes months to issue a ruling.

This is the measure that President Laura Chinchilla has been trying to get passed because it will generate a windfall in the first week of the new year when the tax is supposed to be paid.

The money is supposed to be used for security to counter rising crime, but nearly half will go to financing a police school.

Meanwhile a committee will consider proposals for a sliding scale for the amount of the tax. Some lawmakers objected to the same tax for a large corporation as for a small one. The bill does provide that firms registered as a micro or small enterprise can be exempted from the tax. Inactive corporations are supposed to be half.

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