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Costa Rica Fiscal Transparency 2013

Costa Rica Fiscal Transparency 2013The Chinchilla administration is presenting important changes in the standards of fiscal transparency.

Costa Rica’s legislation is on the verge of passing two new laws. This brings about significant changes to the tax structure currently in effect. The two legislative bills have already passed the legislative hurdles. Now, the bills are shortly expected to be signed into law by the President.

The “Law of Compliance of Standards of Fiscal Transparency” (Ley para el Cumplimiento del Estandar de Transparencia Fiscal) is law project number 17.677. It is being passed according to the text of the law to comply with the standard of fiscal transparency required by the Organization for Economic Cooperation and Development [OECD].

The National Assembly also approved the second law. This is the Strengthening the Tax Administration Procedures Law (Fortalecimiento de la Gestion Tributaria) law project number 18.041. This law will give the Tax Administration more powers; so it will increase the fines and penalties against taxpayers and impose new forms of assessing and collecting tax obligations.

In these articles, I will focus on the modifications that these two laws will bring to the current tax system in Costa Rica.

Law of Compliance with Standards of Fiscal Transparency

The Fiscal Transparency Law (17.677) provides more tools for the Costa Rican Tax department to gather information on Costa Rica Fiscal Transparency 2013taxpayers. The most significant change is that the Tax Department will be able to access the bank and financial accounts of the taxpayers. This finally brings an end to the long-standing principle of bank secrecy in Costa Rica.

Tax exchange agreements between countries

The law allows countries that have signed tax information exchange agreements with Costa Rica to request and also obtain the same banking and financial information of businesses located in Costa Rica.

The modified text of the law would be as follows:

Article 106 bis. Information Located in Financial Institutions

The financial institutions must provide to the Tax Administration information about their clients and users of their services. This includes information about banking operations and balances.

The financial institutions must provide all information related to transactions of any checking or savings accounts, deposits, certificates of deposit, loans, trusts, individual investments, joint investment accounts, stock transactions and any other operation or transaction Costa Rica Fiscal Transparency 2013either active or passive which is pertinent to the Tax Administration to:

(a) Establish, collect or verify any tax imposition, exemption, remittance, levy or lien.

(b) To comply with any request for information pursuant to any international tax agreement

  • to avoid double taxation or treaty for the exchange of tax information
  • or any other international agreement that provides for the exchange of tax information.

Criminal evidence

The Tax Administration would no longer require direct and concrete evidence of non-compliance of a criminal or administrative nature to obtain information. Instead under the new standard, the determination based upon rational principles of the relevance of the information requested as part of an ongoing investigation or audit process is required.

These changes relate directly to Costa Rica real estate. Therefore we are publishing these interesting articles by attorney Roger Petersen. You can read the second and third part of this article Costa Rica changes real estate tax procedures in another American European Real Estate Group’s blog. This article can be found in its original form on Costa Rica Law under blog title Costa Rica New tax Changes for 2013.

The Author

Mr. Petersen is also the author of the well-known book “The Legal Guide to Costa Rica”. His website Costa Rica Law has a lot of useful legal information.


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