The New Corporate Tax YOU Need to Know About

 Costa Rica has approved an annual tax on all corporate entities registered in Costa Rica.  The  law comes into effect on April 1, 2012.  The amount of the tax is  180,330 Colones [US$ 357] for active corporations and  90,175 Colones [$178.50] for inactive corporations. The amount of tax to be paid is actually based upon the base salary of a government employee.  Active is 50% of base salary and inactive is 25% of base salary.  As such the amounts will change as the base is adjusted.  Also keep in mind the exchange rate as well.

An active company is one that is engaged in business transactions and registered with the tax company.   An inactive company is generally a holding company that holds title to a property or vehicle and does not carry out any commercial activities.

For 2012 the the tax will be due by April 1, 2012  and after that it will become due on January 1st of each year.  For 2012 the amount to be paid will be prorated.

Those of you with Corporations in Costa Rica have 3 options:

1.  Pay the Tax.

2.  Transfer the asset and dissolve the corporation.  For this purpose the law is exempting from transfer taxes and registration fees for a one time transfer to an individual or another corporation.   Likewise, corporations that are dissolved during the months of April, May and June will be exempt from paying the tax.

3. Resign as Officers and Directors.  To avoid personal liability the officers and directors with legal representation of the corporation will have one (1) year in which to resign from their positions and record the resignation in the corporate registry.

The Issue of Personal Responsibility of Corporate Officers and Directors
One of the hideous parts of the law is that it transfers to the corporate officer or director that has the legal authority over the corporation the liability for any outstanding annual tax fees.   The law allows these corporate officers or directors a period of one year - until April 1, 2013 to resign from any corporate positions they may be on to avoid the personal liability.  To do so they must first serve notice at the legal domicile of the corporation of their resignation. Then they must appear before a Notary Public to document the resignation and have the Notary record it in the National Registry.

Automatic Dissolution For Non-Payment
The law has a provision which imposes a mandate to the corporate registry to automatically dissolve any corporation which has three (3) payments (3 years) in arrears.  

Exemptions to the Tax
The law has an exemption for those taxpayers which carry out permanent productive activities as micro and small businesses which have been duly registered as such before the Ministry of Economy, Industry and Commerce (MEIC).

Voluntary Dissolution
The law provides for the voluntary dissolution of a corporation when there is a unanimous approval to do so by the corporate shareholders.  In the past the formal voluntary dissolution of a corporation was cumbersome and expensive and hence rarely done.  The law will allow a Notary Public to dissolve a corporation when requested to do so by all the shareholders of the corporation.

The Exemption from Transfer Taxes and Stamps to Transfer Assets
When you transfer real estate in Costa Rica you trigger a transfer taxes, registry fees and stamp of about 2.3% for vehicles that amount is about 3.3%.  The law will exempt a one time transfer for a period of six months the transfer of assets held in corporations which are transferred to an individual or another corporation.


Download the FULL TEXT of the law


Read the newest update and newsletter regarding the new Corporate Tax

We would like to thank attorney Roger Petersen of CostaRicaLaw.com for his permission to reprint this article posted on his website.  

New Site Features for Registered Users!

We have added a few new features to our site that we thought you might like! 


Newest Listings 
We'ver received feedback  from many clients that they often always check our site to see our newest listings, but this has always been a guessing game, as we don't post the list date of the properties. As you know, some properties can take a long time to sell, relative to other countries. We have added a quick search for "NEWEST LISTINGS" for the past 90 days. Listings on this search will appear in order from newest to oldest for new listings entered over the past 90 days. 


Distressed Properties 
It's a buyer's market right? Yes it is! So, we've added a quick search of properties that need to sell as a fast as possible. This does not mean that the seller expects a lowball offer, but in most cases, the prices have already been reduced down to a price level that should be attractive. 


Both of these new quick searches are available ONLY to our registered members. If you have not registered, please send us an email at info@caribesur-realestate.com and tell us about yourself, what your looking for and we'll get you set up.  Once you've been registered, simply login with your email address and password provided under the "MyCARIBE" section on the menu bar to the far right.

As always, we look forward to more constructive feedback from you on how we make make our website and our services better for you!

If You've been a Victim of Bureaucracy, you'll appreciate this!

For anyone that has ever tried to open a phone line account, electrical account, register a property at the muni, sign up for insurance and the worst: Open a Bank Account.....you will see that you are not alone! Enjoy this video.....depicting someone who's had enough and came in well prepared!

New Annual Tax on Corporations

All corporations, branches of foreign companies and limited liability companies must pay in January of each year this tax based on the following parameters: active companies (those conducting a commercial activity) must pay 50% of the base salary (¢158,100 or approximately $300); inactive companies must pay 25% of the base salary (¢79,050 or approximately $150).

Most property owners typically place their property under the name of a corporation and often a vehicle under a different corporation.  Often, in such cases, these are inactive corporations, which would be responsible for paying the $150 annual fee.

When a company is constituted, the tax must be paid proportionally to the time remaining between the date in which the public deed is filed at the Public Registry and the end of the year.

The approved bill grants a period of three months from the date in which the law is in force to dissolve and liquidate the company without paying this tax.

GREEN Management offers a service who can assist you in the payment of this tax or in the process of dissolving and liquidating the company if you require such services.

Local Protests as Hotels Shut Down and Set for Demolition

Republished with permission from the A.M. Costa Rica staff

Police who responded to open up the Caribbean highway Tuesday met firebombs, rocks and burning tires at four locations. The Fuerza Pública said that 10 persons had been arrested.

The protest began Monday night on Ruta 36 and was triggered by expectations of efforts to evict those in residence at two hotels in Refugio Nacional de Vida Silvestre Gandoca. One is the Hotel Las Palmas, operated by Complejo Turístico Punta Uva S.A. The other is the adjacent Hotel Suerre.

The Hotel Las Palmas, operated by Jan Kalina, has been fighting the government since 1993, and Tuesday was the second time that he was evicted from the premises. The government has alleged substantial environmental damage as well as the fact that the hotel is in the national refuge.

The hotel complex is about three kilometers from Punta Uva. The well-manicured grounds of the hotel included extensive beach. Many improvements had been made by the hotel operator.

Many in the crowds that maintained the blockades are residents of the Caribbean who have property in the maritime zone. Many of the homes there predate the maritime zone law that makes their dwelling illegal. They fear that they will be next with the evictions. But they also were fortified by criminal elements that came from Limón Centro.

The burning tires sent columns of smoke into the air. Police used tear gas. The Instituto Costarricense de Turismo said it provided help for tourists who were evicted from the Las Palmas and others in the area who were delayed by the blockades. The institute did not give a number. Traffic was backed up two kilometers, police said.

The tourism institute said it set up tents with bilingual attendants to help tourists.

Blockades were in Hone Creek and near Cahuita, said police.

The Las Palmas case appears to have touched about every court in the land from the Tribunal Contencioso Administrativo y Civil de Hacienda to the Sala IV constitutional court.

It was the Sala IV that froze government efforts in October 2005 to evict Kalina and his staff. At that time the then-minister of environment, Carlos Manuel Rodríguez, said that the hotel would be turned over to the tourism institute for a national tourism school. The luxurious hotel is some 1,500 square meters of structures.

Kalina was back in the hotel shortly thereafter, and the tourism school idea was not mentioned again. Park rangers occupied the hotel Tuesday. It will be demolished.

The order of eviction that was executed Tuesday was signed Oct. 13, 2009. It survived appeals.

The main concerns were environmental damage done when the hotel was constructed, the illegal cutting of trees, building in the public zone of the maritime strip, building drainage to affect wetlands, blocking ditches and destructions of coral.

In addition to the Fuerza Pública and the Unidad de Intervención Policial riot squad, a number of government agencies were involved, including the Cuerpo de Bomberos. About 140 persons were believed involved in the blockades. Officials were quick to note that the evictions from the hotel had nothing to do with the cases of the long-time residents in the maritime zone in Puerto Viejo and Cahuita. These, too, are complex cases.

Web page easily calculates exiting employee’s pay

written by Garland Baker 
Most expats in Costa Rica have experienced the problem of firing an employee or have one leave unexpectedly. One of the biggest headaches is calculating what is owed to them.

What usually happens is the employee goes to the labor ministry and has the calculations made there. An employer never knows if the numbers are right or wrong. Since many employees exaggerate the truth, the amounts sometimes end up in the stratosphere.

Here is a secret for expats to get a handle on employee severance pay.

First a note: An employee’s pay off varies based on years worked. The more an employee has worked, the more they get in cesantía. This is equivalent to severance benefits. Every employee is entitled to them, if they do their job in a satisfactory manner. The amount an employee is entitled to in vacation pay also varies with time.

Expats usually cringe when they have to make these calculations or call a lawyer to do it for them. Believe it or not, most lawyers do not calculate the amounts correctly either.

The savior is on the Internet located here.

This Web page takes the pain out of employer-employee separation. There is some information on the Web site that is in English, but not the severance calculations, so here is a quick course to use this valuable resource. The process is simple, so just follow this example for an employee:

Go to the Web site. Several boxes are on the page to fill in. They are in groups, the first group is called Tiempo laborado or “time worked.” Type in the date in the box labeled Ingreso. This is the employee’s start date. One can use the calendar, but it may not work on some browsers. If not, be sure to input the date as it is represented in Costa Rican format. For example, the day after Christmas two years ago would be represented as 26/12/2009. The dates are in a day/month/year format. Use this date for this example to see if the result at the end is the same as in this example.

The next box is labeled Salida for the termination date. The employee in this example will lose their job at the end of this month so put 30/06/2011 or use the calendar.

The next group is called Tipo de pago or “type of payment.” There are only two boxes, one is labeled Mensual for “monthly” and the other Semanal for “weekly.” Monthly includes monthly and bi-monthly payments. Weekly includes payments by the week, day or hour. For this example, check monthly.

The next grouping is named ¿Le ha sido otorgado el preaviso en tiempo? This means “Was the worker given notice of termination.” The answer is either SI or NO or Parcialmente for some notice was given. If the latter is the case, put in the number of days the employee was given to look for another job before termination. For this example, check no.

The last group on this page is labeled Días de vacaciones por disfrutar. This means, “How many vacation days does the worker have coming.” For this example, use five.

On the right side of the page — on the top and on the bottom of the calculations tables — in small letters are arrows with the word Siguiente. This means “next.” Click one of the arrows.

On this page there are 12 boxes to fill in. These boxes represent the last twelve months of a workers monthly payments. Fill in the boxes with the correct amounts.

Any in-kind benefits should be included in this amount. In-kind benefits include housing, food, or anything else that fits this definition: Payments for goods or services in lieu of money for labor. The domestic worker in this example is provided lunch by the employer worth 20,000 colons a month. For this example, fill in the boxes with the number 155,000 colons, 135,000 – this is a bit more than what a domestic employee earns according to the labor law – and add the 20,000 of in-kind benefits – their lunch.

Again, on the right side of the page – on the top and on the bottom of the calculations tables — in small letters are arrows with the word Resultado. This means “results,” click one of the arrows.

On the page, the employee is presented the amount of what is called liquidación. To pay off the employee in this example would cost 472,750.00 colons. At today’s exchange rate that would translate into $945.50.

Having employees tends to be a pain. In Costa Rica — as in other parts of the world – the employees are really the bosses of the employers. Going to labor court is expensive, and unless an employer has an iron-clad case they will most probably lose.

The best advice is to have a good labor contract, give written reprimands when they are needed – but no more than two, the third is to terminate. Most importantly, and something most people, not even lawyers know, is an employer only has 30 days to act on any fault of an employee, otherwise, the fault expires.

When one needs to end an employment relationship, this handy calculator is easy to use and very accurate and very few people even know it exists.

written by Garland Baker  on June 6 2011 and published by amcostarica.com
Reposted on this blog with permission from both sources. 

New Satellite Maps for most of the Area - THANKS GOOGLE

Great News...if you enjoy visiting or getting a good idea of what is here from up above, Google has just very recently updated their satellite imagery for most of the Southern Caribbean.

Previous images were all from 2004, and the new ones were snapped in mid 2010.

There certainly are a  few more roofs then before, but also in many cases, more trees.  The imagery is on the dark side, but visible.  Areas of clear development as compared to the 2004 images of before are the Margarita Road, town of Playa Chiquita, Cocles and the Paraiso road.   Puerto Viejo and Cahuita photos have not been updated.

We have inserted the live map below for a quick view, so you don't need Google Earth to navigate.

Enjoy the flight!



View Larger Map