Here is an opportunity for a last chance to resign from companies before the Registro Nacional starts collection for taxes due under Law 9024.
One attorney estimated 275,000 out of the 575,000 estimated mercantile companies registered in Costa Rica are defunct. They are part of an estimated 420,277 companies currently behind on the tax, as reported by the Banco de Costa Rica.
The country wants those taxes. Even the ones from the dead entities. Of course they do, it is big bucks. This year the tax is 199,700 colons for active companies and 99,850 for inactive ones. In dollars, so far this year Banco de Costa Rica has only collected $40 million. A small percentage of the $185 million due each year.
Banco de Costa Rica is the official collection arm of the Registro Nacional and the tax authority. There is no other way to pay this tax except through this state bank.
Law 9024 is better known to all as the Impuesto a las Personas Jurídicas or the company assessment tax. Many expats and Ticos alike have ignored it, hoping it would go away. Others have just not been able to pay because they are out of the country and do not have a Banco de Costa Rica account to pay the assessment online.
Doomsday is here. The tax is due and payable now. The grace period ended on Jan. 31. Those not paid, are in default. The bad news is for those who have never paid the tax. For those, collection actions are probably already in the works.
The law says the legal representatives are personally responsible for them. Tax collectors are itching to collect. Article 6 of the law states that the Registro Nacional can dissolve any company with three unpaid periods due, and workers there can start putting preferential liens on assets owned by the company to collect the money.
The process outlined in the law is as follows: Registro officials need to publish a notice in the La Gaceta official newspaper. Once published, they can start dissolving companies in default.
According to Allan Garro of Garro Law, the collection process may even be more expeditious. Garro said in an interview that the national registry could look up in their records all the assets of responsible parties, not just assets in companies in default, and put a lien on them going through a court of collections. This particular tax under Law 9024 transcends the corporate veil and is personal to legal representatives and anyone with a full power of attorney.
Also, according to Garro, the law does not permit partial payments, deferments, or bargaining of any kind. He stressed in the interview, “This law is serious, and the consequences painful. Anyone with liability should act immediately to pay the tax or resign.”
Yes, there is still time to resign. However, not much time, only until March 31, 2014. Here are three ways to do so:
1.Go in front of a Costa Rica notary with a resignation letter so he or she can register the document in their notary book and present it to the Registro Nacional.
2.Find and meet with a Costa Rican consul, grant a power of attorney to someone in Costa Rica to do the same as in step 1. A list of consulate offices is HERE!
3.Prepare a resignation letter in Spanish and a power of attorney for someone in Costa Rica to do step 1. Have the signature, not the content, notarized. Call an attorney in Costa Rica for the steps that follow.
Transitorio IV of the law, states legal representatives must attempt to serve the resignation upon the corporate owners at their legal, registered address before giving the document to a notary to register it with the national registry. However, as long as an individual attests to doing so, most notaries will file the resignation.
Detailed instructions on how to determine responsibility were outlined on Oct. 28. The process is simple. One just needs to do a little research on the Registro Nacional’s digital service Web site. There was a time when the amount due was free information and could be obtained without registration.
This has changed. It is still free, but one needs to register to obtain the data.
Many expats and Ticos do not like this tax, even though 95 percent of it goes to public security. They feel only active revenue generating companies should pay it, not inactive ones that just hold an asset or are a shelf company for a rainy day.
Some expats have reported their inactive company paying the reduced tax was inexplicably changed to active for this calendar year and required to pay the full amount. Is this the country’s attempt to squeeze every drop it can out of everyone?
Actually, many things can change a company from inactive to active, including, but not limited to, hiring employees, having someone report expenses on a D-151 form and, last but not least, passing the tax departments divining rod test.
Garland M. Baker is a 44-year resident and naturalized citizen of Costa Rica who provides multidisciplinary professional services to the international community. Reach him email@example.com. Baker has undertaken the research leading to these series of articles in conjunction with A.M. Costa Rica. Find the collection at http://crexpertise.info, a complimentary reprint is available at the end of each article. Copyright 2004-2013, use without permission prohibited.