New corporate tax goes to full legislature for debate

A legislative committee reported out a bill reinstituting an annual tax on corporations Tuesday, 7-2. Opposition votes came from the committee chairwoman, Rosibel Ramos of the Partido Unidad Social Cristiana, and Otto Guevara of Movimiento Libertario.

A statement released by the Partido Acción Ciudadana gives the impression that owners of corporations will have to pay the tax for all of 2016 if it is approved by the full legislature.

This is No. 19.818. The approved text is not yet available. However, statements from the political parties involved show that the tax rates will be different than those in the tax that was declared unconstitutional in January 2011.
The tax covers sociedades anónimas, sociedades de responsabilidad limitada and similar entities inscribed in the Registro Nacional.

Many expats hold vehicles and properties in corporations. Those with inactive corporations would pay 15 percent of a base judicial salary, the usual method for establishing taxes and fines. The Partido Liberación Nacional estimated that this would be about 63,600 colons or about $120.

Active corporations but without income would pay the same. Firms with gross income up to  50.9 million colons, some $96,000, would pay 25 percent of a base salary or about 106,000 colons or about $200.

Companies with gross income between 50.9 million and 118.7 million colons, $96,000 to $224,000, would pay 30 percent or about 127,200 colons or $240.

Companies with income greater than 118.7 million colons would pay 50 percent of a base salary or 212,000 colons, about $400.

The bill is subject to change when it is debated in the full legislature. Amounts of the tax in future years would increase as the judicial salary increases.

The central government estimates that the bill will bring in about $40 million in taxes from the productive sector. Earlier estimates were higher. Some 95 percent of the proceeds are supposed to go to the Ministerio de Seguridad Pública.

A proposal has been advanced to give some to the Judicial Investigating Organization.

The central government sold the tax to the public and lawmakers as a bonus to the security ministry, but then budget makers reduced the ministry’s budget in anticipation of money from the tax. So when the tax was declared unconstitutional, the central government was in a bind.Lawmakers like Guevara have been seeking big cuts in the current budget, but the central government has declined to so.

The original tax was unconstitutional because lawmakers had made significant changes and failed to publish the final product.

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