Start out the New Year right in Costa Rica. Legal and tax changes for 2019.

The 2019 Legal Update

Sun, Jan 6, 2019 10:54 am

CostaRicaLaw. com The Costa Rica Legal Information Site (ticolaw@gmail.com)
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What is coming up for 2019 in Costa Rica
Happy New Year and I wish everybody the best for 2019 !

I thought I would reach out and set forth some of the latest legal and financial developments in Costa Rica coming up for 2019.
1. Corporation annual taxes due in January. If you have a holding company that is not registered as active then the fee is 64,650 (US$108). For corporations registered as active but with no financial activity or with gross income of less than $86,000 per yer will pay 107,750 (US$180). Active companies with higher gross income will pay either ¢133,860 (US$223) or ¢223,100 (US$372) depending on the amount of the gross income of the company for the year. If you need more details I have posted articles and a video on our CostaRicaLaw.com site.

2. The Mandatory Shareholder Registry starts in March of 2019. The law requires all corporations to disclose and record with the Central Bank of Costa Rica the name of all the shareholders or beneficial owners of corporations registered in Costa Rica. The requirement begins on March 1, 2019 according to the following schedule based on the last digit number of your corporation identification number (cédula jurídica)
March Those ending in 0
April Those ending in 1
May Those ending in 2
June Those ending in 3
July Those ending in 4
August Those ending in 5
September Those ending in 6
October Those ending in 7
November Those ending in 8
December Those ending in 9

3. The Law to Strengthen Public Finances comes into effect in 2019. The Law to Strengthen Public Finances will be implemented 2019, the regulations to the law must be ready in 6 months. The major points covered by the law are as follows: (1) The tax year will be from January 1st to December 31st as opposed to October 1st to September 30th. (2) It creates a Value Added Tax of 13% on most goods and services and 4% for airline tickets and private healthcare services; 2% for medical products, raw materials and machinery used for production, insurance premiums, purchase and sale of university issued products; 1% for the food consumption products that make up the basic necessities list (canasta básica) (3) It establishes a capital gains tax of 15%. (4) Caps the automatic pay increases in the public sector.

4. Electronic Invoicing became mandatory. For 2019 most individuals and companies that sell goods or services will have to do so issuing an electronic invoice (Factura Electronica). The electronic invoicing system generates an invoice which is then routed through the Department of Revenue and delivered by e-mail to the recipient. The government argues that this will curtail tax evasion by forcing all taxpayers to issue the electronic invoices.

5. Property Tax Reminder. Property taxes will be due in March for the 1st quarter of 2019. Property taxes are paid at the local Municipal government office where your property is registered. If you purchased property the national recording office does not automatically inform the local government so make sure you follow up so that they have current information for you. It is also the obligation of the property owner to file a property tax declaration every five years.

On the financial front.

According to the OECD country report it indicates that “Growth is projected to recover to around 3¼ per cent in 2020 and be broad-based, underpinned by both domestic and external demand. However, uncertainty, particularly surrounding the planned fiscal reforms, is weighing on growth in the near term. The projections are based on the assumption that the fiscal reforms will be implemented from 2019, with modest fiscal tightening holding back growth in 2019 and 2020.”

From Moody’s: “…..Moody’s lowered Costa Rica’s long-term country ceilings: the foreign currency bond ceiling to Ba2 from Baa3; its foreign currency deposit ceiling to B2 from Ba3; and its local currency bond and deposit ceilings to Baa3 from Baa1. The short-term foreign currency bond ceiling was lowered to Not Prime (NP) from P-3 and the short-term foreign currency deposit ceiling remains unchanged at NP.”

All the topics indicated above I have covered in more detail on blog posts and videos which are on my site so you can dig deeper on the subject matter as needed. The links are in the icons below or visit our website at https://CostaRicaLaw.com.

Roger Petersen

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