High court gives its OK to corporate tax proposal

The Sala IV constitutional court ruled Wednesday that a legislative proposal to tax corporations does not violate the country’s charter.

The action, announced late Wednesday afternoon, opens the door to final passage of the measure in the Asamblea Legislativa. However, lawmakers, who already approved the plan once, sent the measure back to committee for possible changes.

The measure imposes an estimated $316 tax on every active corporate entity in the country. Inactive corporations would pay half that.

If the legislative committee makes substantial changes, there is a possibility that the measure will once again go to the Sala IV. In Costa Rica, magistrates can get an advance look at proposed legislation and give an opinion.

Three magistrates said that the measure was unconstitutional, said the Poder Judicial in a
summary. The exact reasons were not given. However, the majority thought the tax passed constitutional muster.

The magistrates also said that the measure was not unreasonable or disproportionate, arguments that opponents had advanced.

This is the tax that President Laura Chinchilla and her administration is trying desperately to have passed. The measure would generate about a $700 million windfall in the first week of the new year.

About half of the money would go toward supporting a new police school, she has said.

Some lawmakers objected to the time lapse when owners of corporations can dissolve them to avoid paying the tax. Others thought that there should be a heavier tax on corporations that are making money.

The measure, No. 16306, is relevant for expats because many have homes and vehicles in corporations at the advice of their lawyers.

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