In order to provide a new and last opportunity for reactivation of those companies dissolved due to lateor lack of payment of the tax on legal persons (2012-2015), Bill Number 20749 entitled “REFORM” OF TRANSITORY II OF LAW N ° 9428, TAX TO LEGAL PERSONS, OF MARCH 21, 2017,” was presented and processed before the Legislative Assembly; which is currently in the fifth position on the agenda of the Committee on Financial Affairs. Once approved by at least one deputy of the commission, the bill would be sent to the Full Congress.
The bill establishes a series of terms, among which it indicates that:
“… To the mercantile companies, the subsidiaries of a foreign company or its representative and the individual companies of limited liability, that within the effective date of this law and until December 15, 2018 have paid the sums owed by Law No. 9024, Tax on Legal Persons, of December 23, 2011, may make the payment of the periods due from the years 2012 to 2015, according to the aforementioned rule, without therefore having to pay interest or fines.
The legal entities that have been dissolved and that have paid the sums owed no later than December 15, 2018 may submit to the National Registry a request to cease their dissolution, leaving said legal entities in the same legal condition in which they were found before they were dissolved, with the retroactive effects that this entails. They will have till January 15, 2019 to submit the request to the National Registry, after the amounts owed are paid … “, if it was to get approved and sent to the whole congress for discussion, it would obviously be with different dates and updated to those indicated above.
If this project is approved, an amnesty would be offered again regarding the interest and fines accumulated for the tax.
After the cancellation of the debt, the interested companies may request for termination of dissolution before the National Public Registry “… leaving said legal entities in the same legal condition in which they were before their dissolution, with the retroactive effects that this entails.”
The cessation of dissolution will be made at the request of the partners of the company that hold at least fifty-one percent (51%) of the shares, who must appear before a notary in public deed, prior publication of an edict in the official gazette ‘The Gazette’ on behalf of the applicant. Subsequently, the request will be subject to registration qualification.
Last but not least, if the dissolution of the mercantile companies, the individual limited liability companies or the branch of a foreign company, and the respective payment of the registration seat, the Judicial Collection Department of the General Directorate of The Treasury is empowered to continue the collection procedures or establish these against the last officially registered partners, who will be jointly and severally liable for the payment of this tax.
In the month of December 2018, our president, Carlos Alvarado Quesada, signed a series of decrees and guidelines to guarantee the LGTBIQ (Same sex couples) population the equality and parity of their rights.
The decrees are already known, such as the recognition of gender identity in the identity document for the trans population (self-perceived gender), the inclusion of biphobia (hatred and rejection towards bisexual persons) on the day of homolesbotransphobia, as well as the declaration of public interest of the hormone protocol.
Starting on Monday, February 4th, same-sex couples with limited resources may apply for a housing bond and credit programs from the National Housing Financial System, since the guideline was published in the Official Gazette. This decree instructs state institutions to provide social assistance to anyone who requests it, without making any distinction about whether it is a heterosexual couple or a same-sex couple.
In addition, the document requires the State to recognize, under certain conditions, as “family nucleus” that which is made up of two men or two women.
In order to opt for these benefits, couples must have shared food, bed and sexual cohabitation for at least three uninterrupted years. In the same sense, the relationship must be evident, patent, notorious, not simultaneous and faithful.
These regulations come hand in hand with the ruling of the Inter-American Court of Human Rights and the Constitutional Chamber, which ordered the Legislative Assembly to regulate equal marriage, this within a period of 18 months, which began on November 26th, 2018.
In case of not doing it in the contemplated term, the marriage between same-sex couples will be totally valid, and there would be no sanctions for the Notaries that perform these acts.
Costa Rica proposes that the Central Bank and the Commission promote competition and set a single percentage in the fees paid by businesses for accepting credit or debit cards
The affiliation commissions in Costa Rica are, in their majority, superior to 4% without differentiating between credit and debit cards, while at an international level the affiliation commission is located at much lower rates.
The spread of credit and debit cards, as well as the increase in transactions with plastic, have generated a distortion in the economy affecting specially small businesses, which must pay a significant amount of their income to banks, translating into bigger prices and equally affecting consumers who must pay slightly more for each product.
The annual profits of the financial system for the collection of these commissions, according to Chamber of Commerce estimations, are approximately $175,000,000.00 (one hundred and seventy-five million dollars). On the other hand, countries such as the European Union have a regulation where a cap is set at exchange rates of 0.2% for debit cards and 0.3% for credit cards.
In Latin America, for example Mexico, the Central Bank periodically reviews the mechanism of determination and the level of exchange rates and, in addition, banks must make them public. Currently, the amount charged to businesses is 1.91% for credit cards and 1.15% for debit cards.
Bill number 21.177, which aims to empower the government to regulate the commissions charged by financial entities to businesses, was presented before the congress by several representatives.
What the proposal states
The proposal states that “… It should be a single percentage for all businesses and the commission for transactions with debit cards should be lower than the one charged for credit card transactions, which will be reviewed and published every 24 months by the issuing banks.”
Regarding the topic, María Isabel Cortés (director of the Costa Rican Banking Association) said to Crhoy.com, that in the determination of commissions “… the volume of transactions of each trade greatly influences, given that there are significant fixed costs. Exchange allows issuers to have the incentive to widely distribute modern means of payment, especially debit cards that, because of their marginality, would not be possible to serve if there were no adequate exchange rates. ”
Cortés added that “..” The exchange rate must maintain a balance, if it was very low, it wouldn’t encourage the task of issuing cards and cardholder attention and if it was very high, it wouldn’t encourage the acceptance of the cards as a means of payment. ”
The objective of this law is to create the regulatory framework for the establishment of exchange and acquiring commissions for purchase transactions with credit and debit cards. It would also guarantee a more competitive environment and increase fiscal traceability, in benefit of businesses, consumers and the Public Treasury.
The Ministry of Finance has decided to extend the deadline for payment and declaration of solidarity tax (Luxury Homes) to January 25.
On January 10th, the General Directorate of Taxation, of the Ministry of Finance, communicated through its official page that the deadline to declare and pay the solidarity tax, without a surcharge, for the strengthening of housing programs for the 2019 period, will be extended just this time until January 25 th of this year.
This is due to a delay in the publication of the sections in the official newspaper ‘La Gaceta’, for which an extension of ten calendar days is granted, which is valid from that same date.
This declaration is presented every three years and the payment of the tax is not deductible for purposes of income tax.
For that period all taxpayers must make the declaration to update the value of their properties.
This obligation must be fulfilled by all real estate owners for residential use, which are used in a regular, occasional or recreational manner, including both fixed and permanent installations, whose construction value is greater than one hundred and thirty-one million colones (¢131,000,000.00). The tax is paid on the value of the construction, plus the value of the land.
The new sections on which the calculation is generated are the following:
Remember that the Corporate Tax must be paid year after year. The term to cancel, without interest, is within 30 calendar days following January 1 of each year.
The rates are established according to the following table:
Companies not registered in the Unique Tax register as a taxpayer of income tax.
Companies that are incorporated or registered during the fiscal period.
Reporting companies -not taxpayers- in the income tax.
Companies registered in the Simplified Taxation Regime.
Companies registered as taxpayers of the income tax, which declare gross income at zero or without activity.
Registered companies that have declared gross income lower than 120 base salaries, in the income tax of the previous fiscal period.
Registered companies that have declared gross income between 120 and less than 280 base salaries, in the income tax of the previous fiscal period.
Registered companies that have declared gross income equal to 280 base salaries or more, in the income tax of the previous fiscal period.
**Base salary 2019: ¢446.200.
Those who do not cancel this obligation are exposed to the payment of interest and fines by Taxation, which corresponds to 1% per month with a maximum of 20%. In addition, in case of default, the National Registry will not issue certificates or inscribe documents in favor of a delinquent company, and delinquent companies may not contract with the public sector through tenders.
In case the companies do not pay the Corporate tax and stop paying for 3 consecutive periods, the registry may dissolve the company ex officio and seize the assets that are in the name of the company, and in case the company does not have assets , the legal representatives.
For this year 2019 and by Decree No. 41434-MTSS published in the Official Gazette, it is established that, starting on January 1 and in force for one year, the private sector will have a salary increase of 2.96%, being of mandatory application for all the minimum wages that the decree establishes or for those that by practice and right has been acquired. Additionally, the increase for domestic workers is 3.50%.
The main increases in wages can be observed divided into three categories:
a. By ordinary working day:
Workers in Non-Qualified Employment ¢10,358.55 Semi-Skilled Occupation Workers ¢11,264.17 Workers in Skilled Employment ¢11,471.53 Workers in Special Occupation ¢13,530.38
In accordance with the provisions of Law No. 7509 “Tax Law on Real Estate”, it is established that the owners of real estate are in the tax obligation to declare the value of their properties in the Municipality of the canton where the property is located. The tax is calculated based on the value of the land and buildings (in this case the declared value if accepted by the Municipality will be taken as a basis for calculating the tax), as recorded in the respective Municipality on the first day of January of the same year in which the tax will be collected; for this reason, it is that every property must have a registered value.
There are several ways to establish the value of a property. The general rule is that as indicated above, the owners declare the value of their assets to the Municipality where each of them is located, and it is the taxpayer’s obligation to update their declaration every five years.
The value of the goods can be modified automatically when a property is sold for a greater amount than the one registered by the Municipality. The same happens if a mortgage lien (either a common mortgage or mortgage bonds) is constituted for a higher value than the one registered; or if the land is divided or constructions or improvements are made that represent a value equal to or greater than 20% of the registered value.
The Municipalities have the power to sanction the taxpayer who does not present the value statements on their properties in time. The fine consists of an amount equal to the difference left to pay; that is, the sum of the tax that was not paid precisely for the failure to update the value of the asset.
This means that if the taxpayer is late or simply does not declare the value of his property with the periodicity that the law indicates (5 years), the taxes that are not paid for, will incur a fine. For this purpose, the Municipality is authorized to carry out, on its own initiative, the valuation of any real estate whose value was not declared, or its owners did not update. This mechanism works to recover all unpaid taxes.
Regarding the declaration of real estate
The declaration of real estate is the determination and updating of the property’s value, by which the characteristics of the land and the construction (s) that comprise the property are considered. It is the duty of the taxpayer to present his declaration at least once every 5 years through the Declaration of Property Tax Form provided by the Municipalities for such purposes. All natural or legal persons who own properties registered or not before the National Registry must declare their properties, in the case of ommision to present the declaration, the Municipality will be empowered to officially assess all undeclared property.
The tax is calculated on the total value of the property (the land plus construction) to which a fee of 0.25% will be applied, resulting in the amount of the Real Estate Tax, for which it is appropriate to charge the sum of ¢2,500,00 for each million of the value of the property. The tax is annually established, with the facility to fully cancel it in advance, or by quarterly installments, with the understanding that each quarter due generates the surcharges for corresponding interest. If the Real Estate Tax is not paid on time, it is exposed to the debt being transferred to the Judicial Collection, which would entail other charges for costs and attorney fees, as well as imposing a lien for a preferential legal mortgage on the property and an eventual auction of the property.
Exemption from tax payment
For 2019, the base salary of Clerk 1 was established in the sum of ¢446,200.00 according to the benchmark of the Judicial Branch, which serves as a parameter for the determination of the value that each year allows only natural persons who have only one property registered in their name in the Real Estate Registry, to manage before the respective Municipalities the exemption from the territorial tax that they have to pay.This is stated in Article 4 of that regulation:
“Article 4.- Property not subject to tax
They are not subject to this tax: (…) e) The property that constitutes a single asset of the taxpayers (natural persons) and has a maximum value equivalent to forty-five base salaries; nevertheless, the tax must be paid on the excess of that sum (…) “ Therefore, natural persons with a single immovable property with a fiscal value less than or equal to ¢ 20,079,000.00 (twenty million, seventy-nine thousand colones) will not have to pay the property tax on real estate. Likewise, those goods that, nevertheless, constitute a unique good but whose value exceeds the amount indicated, must pay the corresponding tax but calculated on the excess of the amount previously indicated.
The Solidarity Tax for the Strengthening of Housing Programs (ISO), or “tax on luxury homes”, as it is popularly known, has been ready to be paid since January 1 and the deadline to declare and pay ends January 15th. It must be paid by the owners of all the properties with values higher than ¢129,000,000.00 (one hundred and twenty-nine million colones) and is based on the value of the real estate for residential use, used on a regular, occasional or recreational basis, including fixed and permanent installations.
Through Executive Decree No. 40786-H, published in the official gazette La Gaceta, on December 22, 2017, the Ministry of Finance updated and established the sections for the determination of the tax created, which have been in force since January 1. of 2018, which at the time of publication of this article would be those that are in force by 2019, in accordance with the provisions of Article 10 of the Solidarity Tax Law for the Strengthening of Housing Programs No. 8683, which states: “(…) The Tax Administration must publish the valuation parameters established in this Law, in the media, be it written or electronic, as it deems appropriate, forty-five (45) days before the start of each fiscal period. In case of not publishing them, the valuation parameters used in the previous period will be applied “, however, any notification made by said Entity in this regard must be considered.
Based on the above, the sections for the application of the luxury tax are detailed as follows:
Rate to Apply
Up to ¢ 323,000,000.00 0.25% On the excess of ¢ 323,000,000.00 and up to ¢ 647,000,000.00 0.30% On the excess of ¢ 647,000,000.00 and up to ¢ 970,000,000.00 0.35% On the excess of ¢ 970,000,000.00 and up to ¢ 1,295,000,000.00 0.40% On the excess of ¢ 1,295,000,000.00 and up to ¢ 1,617,000,000.00 0.45% On the excess of ¢ 1,617,000,000.00 and up to ¢ 1,943,000,000.00 50% On the excess of ¢ 1,943,000,000.00 0.55%
An affidavit must be presented every three years to update the fiscal value of the real estate and the luxury tax is annually charged. If it exceeds the value recorded by the administration, the new declared value automatically modifies the applicable tax base for the fiscal period in which it is declared.
When the immovable property object of this tax belongs to several co-owners, they must declare it jointly. In case of transfer of ownership of the real estate, the new owner will be jointly and severally liable for the payment of the tax of the fiscal period in force at the date of acquisition, as well as the corresponding interest.
The omission in the presentation of the declaration will have a fine equivalent to fifty percent (50%) of the base salary (¢ 223,100.00), likewise, the non-compliance in the cancellation or late payment of that tax is sanctioned with a one percent monthly fine (or fraction of a month) on the amount left to cancel, in addition, of an interest rate of 12.56 percent on that same amount.
Equal Opportunities for Workers with Family Responsibility (Convention 156)
This past September 6th , the Congress of Costa Rica approved in the second debate the Agreement on Equal Opportunities and Treatment between male and female workers: workers with family responsibilities (Convention 156), through Law No. 9608, which was published December 5th of this year and that has already been approved by 44 different countries.
The agreement commits each signing country to include, among the objectives of its national policy, that of allowing people with family responsibilities either with children or even with other members of his or her direct family (that in an evident way are in need of care or support), perform or wish to perform a job (this applies to all the branches of economic activity and to all the different category of workers as equal), can do so without being subject to discrimination and without conflict between their family and professional responsibilities.
It also includes a series of recommendations, such as the adaptability of working hours for people with family responsibility, the need to involve men in the care of children, and the creation of parental leave after maternity leave, which can be requested by either women or by men.
In accordance with the foregoing, we recommend that Companies incorporate or adapt, within their internal regulations, policies that regulate, from the pre-contract stage, until and after the employment relationship, the issue of non-discrimination due to family responsibilities, and to also consider the needs in terms of employment conditions and social security.
For more information or advice, ERP Lawyers & Associates makes available its Labor Law team, which are experts in this field. Feel free to Contact us and we will gladly assist you with anything related to this particular matter or any other legal matter that you might need assistance with: http://erplawyers.com/en/contact-us/
The bonus, as well as vacations, are an indisputable and inalienable right for workers in Costa Rica, and this is how the Act of Payment of the End of the Year Bonus to Workers of the Private Sector Companies, Law No. 2412, establishes and regulates everything regarding this “additional salary” that every employer must pay to his collaborators, whatever the activity, within the first twenty days of December of each year.
Said benefit must be calculated based on the average of ordinary and extraordinary salaries (overtime and any other wage payment that has been made in the period) accrued by the same person must be taken into account, during the previous twelve months, calculated from the first of December of each year, and until November thirtieth of the following year, to be subsequently divided by 12 (months of the year).
The foregoing should not include what concerns the periods of disability (only what was paid by the employer during that period), nor the leave without pay, but does include what was received during the four months of maternity leave, if any. The bonus must be paid in full, that is, no deductions should be applied (tax or social charges), except for the amount of child support, if any. In case the employee has not completed a full year of work, the accrued must be added during the time worked and divided by twelve.
In the event that the employer does not pay the bonus, is delayed or paid incompletely, there will be an undue withholding of the salary and a serious fault to the obligations of the contract, empowering the worker to terminate the employment relationship with employer liability; and additionally, the employer may be liable for a fine ranging from a base salary to twenty-three base salaries, as established in the Labor Procedural Reform, and determined by the Judge according to the damages caused to the employee.
In case that, as an employer or an employee, you require legal advice on labor matters, ERP Lawyers offers a professional team with extensive experience in this area. Contact us and it will be our pleasure to offer our services.
NOTE: This article, which is based on regulations in Costa Rica, is issued for informational purposes, not for advice. It is published by: ERP LAWYERS & ASSOCIATES.
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