The Sala IV constitutional court struck down as unconstitutional Wednesday key parts of the 2011 tax on corporations. But the magistrates ruled that operators of corporations will have to pay the tax for 2015.
The legal appeal against the tax included the entire law, No. 9024, but the magistrates found just three sections unconstitutional,
These included sections on what entities would be taxed, the amount of the tax and the penalties for not paying.
The majority of the Sala IV magistrates agreed the existing law was not constitutional because a substitute bill had been adopted in the legislature, and this new version had not been advertised to the public. The changes between the original publicized bill and the one adopted were in essential parts, said the Poder Judicial.
These additions included the sanctions and important aspects of the tax, said a Poder Judicial summary.
Proposed legislation always is published in the La Gaceta official newspaper when introduced in the Asamblea Legislativa.
But when a committee makes substantive changes, publication again is required.
Three magistrates went even further and said that the tax violated the principle of a just tax system because it imposed the same tax on all mercantile companies, such as sociedades anónimas and limited liabilities companies as well as other legal entities, without taking into account their differences of symmetries.
In other words, big and small corporations paid the same tax.
They were Gilbert Armijo Sancho, Ernesto Jinesta Lobo and Luis Fernando Salazar Alvarado. Three other magistrates, Fernando Cruz Castro, Fernando Castillo Víquez and Nancy Hernández López, said they did not think the law was unconstitutional, according to the Poder Judicial summary.
The tax also covered foreign corporations with offices in Costa Rica.
The constitutional court said that to avoid what it called grave financial dislocations, the decision of unconstitutionality will not go into effect until the 2016 fiscal year. So operators of corporations will have to pay the tax this year to void interest. The tax is supposed to be paid in January each year.
The tax is based on the salary of a specific judicial employee. For 2015 the tax for an active corporation is 201,700 colons. That’s about $382. Owners of inactive corporations pay half that.
One of those who challenged the tax was Allan Garro of Garro Law. He provides information to A.M. Costa Rica frequently on legal matters for news stories.
Garro said last night that when the case was accepted about a year ago by the Sala IV, he had the opportunity to join it and file a brief. He noted that many corporations already have paid the tax for 2015, and that this may be why the court voided the tax for 2016. Based on this, the government can finish collecting any outstanding amounts this year, he said.
He interjected a cautionary note in an email:
“. . . I can foresee that the government will push hard on the congress to copy and paste the existing law to publish it again as a project then to approve it as a law without further changes so they comply with the principle of publicity. So expecting not to pay any more tax on corporations next year might be just a dream.”