The end of September brings fiscal tax year 2014 to a close. Oct.1 begins 2015. There are tax filings and payments just around the corner for almost everyone.
Tax dodgers are caught by not filing required tax forms. The country’s tax system is very reliant on the checks and balances built into the system. The tax department also analyses gross and net profit margins and changes in owners’ equity that do not match with taxes paid against profits to find companies that are not paying their taxes fairly. Random audits are occurring more frequently, too, to catch cheaters.
Here is a summary of what is on the horizon:
Form D-150 is a withholding report for anyone paying an employee over the threshold where income taxes become due. When this occurs, law requires taxes be collected by an employer and paid to the government monthly. This report is a summary of those payments.
This year Form D-151, is due on Dec. 1, because Nov. 30 falls on a weekend. Many expats overlook this filing because they believe it does not apply to them. The D-151 is an informational form used to report sales and purchases to the tax department. It is used to crosscheck information, one of the most important keys in finding tax cheats.
Income taxes are due with Form D-101 Dec. 15. Many expats working in Costa Rica illegally do not file the form or pay taxes. This is cheating too. And, it is not fair to Costa Rica. The country needs the money.
To file a tax return one needs to have an identification number. Most illegals do not have one of these, but the tax department has a special number to be used called a N.I.T.E. This stands for Número de Identificación Tributaria Especial. It is used in cases where an individual does not have a Costa Rican cédula or DIMEX card. A DIMEX is an immigration identity card.
Everyone with a vehicle has to pay marchamo tax. It is due Dec. 31. This tax is a property asset assessment on vehicles. It is collected by the Instituto Nacional de Seguros de Costa Rica, which, in turn, pays what it collects to the government.
It seems like everyone just paid his or her Law 9024 taxes. Well, that may be so, but soon it will be due again. The law is better known to all as the impuesto a las personas jurídicas or the company assessment tax. Last year, the government tax institution changed inactive companies that pay the lower company tax assessment created by Law 9024 to active without any warning. It made people mad.
There is still time to dissolve old companies or inactivate them before the end of the year. Dissolving a company does away with the tax. Inactivating a company reduces it 50 percent. Converting a company to a sociedad civil also eliminates the tax.
Kevin Chavarria, a certified public accountant, said in a telephone interview that Dirección General de Tributación, the tax department turns over reports on the active and inactive status of companies to the Registro Nacional Dec. 15. He said if a company shows active on that date, full taxes will be due on Jan. 1. The only way to combat this is to go through the inactivation process beforehand.
Wealthy expats need to worry about Form D-179. It is a pain in the side for most of them too. This is a tax on residential properties. It is the aggregate value of a property including all of its features, to include but not limited to, pool, tennis courts, BBQ, rancho, guest houses, etc. The tax to be paid is equal to 0.25 percent of the property’s total value to a maximum tax rate of 0.55 percent since it is a progressive tax. The value of the house is determined by a guide designed by the government and needs to be filed every three years. Commercial properties are not subject to this tax.
Last on this list is the annoying education and culture taxes. Why does the country still even have it on the tax rolls every year? Many people, including professionals, slough off filing form D-110 and paying these taxes. However, paying them is required by Ley 5923, and every company in Costa Rica listed at the Registro Nacional is required to pay this tax. A company’s net capital amount determines the tax to be paid.
Broke yet? Hope not, because property taxes are not on the Dirección General de Tributación’s list. Nevertheless, they are due quarterly to the municipality where the property is located. 2014 needs to be paid in full by Dec 31.
This is a good time to revise Christmas lists and delete those dream items to make rooms for up and coming tax responsibilities.
Most returns and payments are now filed and paid online, so sending a piece of coal to the taxman along with your tax return is no longer possible.
Garland M. Baker, a certified international property specialist, is a 44-year resident and naturalized citizen of Costa Rica. His firm’s team provides multidisciplinary professional services to the country’s international community. Reach him at firstname.lastname@example.org. 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 free reprint is available at the end of each article. Copyright 2004-2014, use without permission prohibited.259