Tax collecting ministry takes action to respond to Panamá papers

Even though there have been no clear cases of tax evasion involving Costa Ricans within the mountains of paperwork stolen from a Panamá law office, the country’s tax authorities are acting as if there were.

The Ministerio de Hacienda said Tuesday that it would renew discussions with Panamá in order to agree on a system to exchange tax information. The ministry, which houses the tax collectors, also said that it would launch investigations of each of the individuals, corporations and law offices named in the papers.

The Costa Rican information is being released by the Universidad de Costa Rican newspaper El Semanario based on revelations from the International Consortium of Investigative Journalists.

The news articles in the weekly paper contain several dozen names but they all seem to be involved in legitimate activities even though they may have had contact with the Panamá law firm of Mossack Fonseca.

There is a growing consensus at the legislature to pass a bill that is designed to combat tax fraud. But the bill would have little impact on those who set up foreign corporations to channel money outside of Costa Rica. There also is some concern among lawmakers that the ministry is overreacting.

A vice minister, Fernando Rodríguez Garro, appeared before lawmakers and outlined the ministry’s plans.

The agency said that the problem of tax fraud, avoidance and evasion requires an integrated reform of the tax system.

However, avoidance is setting up one’s affairs legally so that the smallest amount possible is paid in taxes.

The ministry and its tax collecting arm frequently confuse avoidance and evasion. Setting up an offshore corporation is one way to avoid taxation legally.

The articles about the secret law firm papers broke Sunday, and there have been repercussions elsewhere in the world.

The executive branch’s tax package has been stalled in the legislature because some members would like to see substantial expense cuts.

The Partido Liberación Nacional has come out for some tax reform, including what is called renta global. That is a single rate for all sorts of income. Now the rates vary depending on the source. But Antonio Álvarez Desanti, who heads the party in the legislature said he and his colleagues opposed rental mundial, which is taxing foreign earnings as they enter the country.

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