Government says corporate tax bite is $85.5 million

The central government says that a tax on corporations collects 45 billion colons a year. That’s about $85.5 million.

Casa Presidencial disclosed this as he made a pitch Thursday that the tax be renewed. The Sala IV ruled the tax to be unconstitutional due to procedural errors.

The tax is on corporations, and active ones would pay about $400 a year. Inactive corporations are assessed just half that.

This is the first time that a number has been specified for the amount raised.

Some 95 percent of the money goes to the  Ministerio de Seguridad Pública, but there never has been a detailed accounting of what expenses the tax covers. At one point the ministry said that the tax money would buy new boots for police officers.

Casa Presidencial said that unless the tax were renewed there would be a black hole in governmental financing. Ministries and Casa

Presidencial have joined together to campaign for passage.

The legislature goes into Christmas recess Dec. 18, but the law contains a paragraph that makes the law proportional when it goes into effect. So if the bill passes in January, operators of corporations would pay eleven twelfths of the full tax.

There is no guarantee that the legislature will pass the tax even though the procedural problems have been resolved. Some lawmakers are unhappy that the central government has not made budget reductions despite the mounting national deficit.

The tax bill also says that corporations cannot deduct the cost of the tax on their own annual tax returns.

The law went into effect in 2011, and the Sala IV said that corporations should still pay the 2015 tax even though the measure was unconstitutional.

Many expats keep their vehicle or home ownership in corporations.

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