Double taxation claim against corporate tax rejected

The Sala IV constitutional court has thrown out one challenge to the tax on corporations.

The Poder Judicial reported Tuesday that the court did not agree with the argument that prohibiting taxpayers from deducting the amount on their income tax represented double taxation.

This has been a common argument because corporations have to pay annual taxes that range from 10 percent to 30 percent, depending on the amount of gross income. If corporations cannot deduct the annual corporation tax, the amount must be included in gross income for purposes of the annual impuesto sobre la renta or income tax.

The short summary provided by the Poder Judicial said that the Sala IV disagreed and said that the tax on corporations, called impuesto a personas jurídicas, and the annual income tax were different taxable events (distinto hecho generador), and therefore the challenge was rejected.

The tax on corporations became law in 2012, but the amount was prorated because the levy only went into effect in April. This year the tax is 190,000 colons on an active corporation, and it is due by the close of business Thursday. The amount is $382 at the current rate of exchange. Owners of inactive corporations pay half that amount.

Corporations that do not pay the tax are suspended from doing business. However, the surcharge is very modest, and many corporate managers are awaiting the Sala IV resolution of a handful of other pending appeals against the tax.

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