New corporate tax appears to be frozen in committee

The corporate tax that concerns a lot of expats remains bottled up in a legislative committee.

Lawmakers from two parties criticized Rosibel Ramos, the head of the Comisión de Hacendarios, for not advancing the proposal, No. 19.818. The measure would reinstate a modified version of the corporate tax that was declared unconstitutional a year ago.

Nidia Jiménez Vásquez of the Partido Acción Ciudadana, the president’s party, said that Lawmaker Ramos was blocking 40 billion colons earmarked for the Ministerio de Seguridad Pública. The amount is about $75 million.

Ms. Jiménez complained on the legislative floor Monday that the measure has not seen any action in the committee for 11 months. The estimate of the money the measure will bring in might be a little high. The security ministry figured the last annual income to be about $56 million.

Antonio Álvarez Desanti of the Partido Liberación Nacional said also Monday that the lawmaker was blocking the funds that were needed by the Ministerio de Seguridad Pública and the Judicial Investigating Organization which need the money to fight drug trafficking and organized crime.

Actually the Judicial Investigating Organization is not included in the measure. Some 95 percent of the funds collected are supposed to go to the ministry.

Some 5 percent goes to the Ministerio de Justicia y Paz to help support its agency that runs the prisons.

When the tax first was collected, the security ministry used the money to purchase boots for Fuerza Pública officers.

Álvarez said that in the last 10 months that Ms. Ramos has headed the committee no legislation has been approved and passed to the full legislature. She is a member of the Partido Unidad Social Cristiana.

The legislature is due for a reorganization May 1, and Ms. Ramos may not continue in that job. Still, there will be some time before corporation owners have to pay the tax if it is passed.

According to the text of the bill, the law would not go into effect for three months after it is finally passed, signed by the president and published in the official newspaper.

The status of the bill is important for expats who own sociedades anónimas and other forms of corporations Costa Rica.

The Comisión de Hacendarios also is studying the extensive tax package put forward by President Luis Guillermo Solís

As Costa Rica Report noted Monday, the tax package has been in limbo. The A.M. Costa Rica affiliate noted that CR Hoy reported that opponents say the real problem is overspending on the part of government and point to excessive government salaries and the recent purchase of 64 Harley motorcycles for police when cheaper models would have sufficed.

The Sala IV constitutional court struck down as unconstitutional key parts of the 2011 tax 13 months ago. But the magistrates ruled that operators of corporations still had to pay the tax for 2015.

The revised proposal reduces the amount that smaller corporations have to pay, a situation that was criticized in the original bill.

The draft, which was introduced last Dec. 2 by the Solís administration, sets up a sliding scale in which firms with higher incomes pay 60 percent and smaller companies pay just 30 percent of a judicial base salary. Inactive corporations pay 15 percent.

The base salary of a judicial office worker in 2016 is 424,200 colons, according to the Poder Judicial. That’s about $798. This is an amount that frequently is cited in laws in Costa Rica for taxes and fines. That roughly adjusts the amount based on inflation.

Based on this amount, firms that have gross incomes of 106 million colons, 250 times the base salary and about $200,000, or more will pay 60 percent, which is  254,520 colons or around $479.

Smaller companies that are doing business and are listed as taxpayers would be assessed half that.

Inactive companies that are not listed as taxpayers would pay 63,630 colons or about $120. Many expats have their homes or cars as assets in an inactive corporation.frozentax022316

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