Corporate Tax 2010 - BMR Advisors

Chapter 10
Costa Rica
Carolina Flores Bedoya
Arias & Muñoz
Quetzalcoatl Martínez
1 General: Treaties
1.1 How many income tax treaties are currently in force in
Costa Rica
No income tax treaties are currently in force in Costa Rica.
1.2 Do they generally follow the OECD or another model
Not applicable.
1.3 Do treaties have to be incorporated into domestic law
before they take effect
Treaties only have to be approved by Costa Rica’s Congress before
they take effect.
1.4 Do they generally incorporate anti-treaty shopping rules (or
“limitation of benefits” articles)
Not applicable.
1.5 Are treaties overridden by any rules of domestic law
(whether existing when the treaty takes effect or
introduced subsequently)
Treaties are not overridden by any rules of domestic law, except for
constitutional provisions.
2 Transaction Taxes
2.1 Are there any documentary taxes in Costa Rica
Yes. Documentary taxes must be paid for most documents used in
courts or public offices and for many private transactions, such as
deeds, mortgages, transfer of vehicles and real property. The tax
rate is 0.5% of the value of the contract.
2.2 Do you have Value Added Tax (or a similar tax) If so, at
what rate or rates
Yes, we have a Sales Tax (“ST”), which is similar to VAT. The rate
is 13%.
2.3 Is VAT (or any similar tax) charged on all transactions or
are there any relevant exclusions
The ST is charged on the sale of merchandise. Services are not
subject to sales tax, with very few exceptions. Sale of merchandise
includes all transactions resulting in transfer of ownership of
moveable goods manufactured or acquired for their ultimate sale. It
also includes importation of merchandise. The following products
are exempted from sales tax: basic consumption food products;
medicines; and agricultural and fishing supplies. The services
subject to sales tax are: restaurants; bars; hotels; mechanic
workshops; parking; telephone and cable; film developing; storage;
laundry; publicity; car wash; custom clearance services;
international moving services; insurance premiums, except those
for personal risks, labour risks, crops and those for low income
housing; press services; and real estate services. The applicable rate
is 13% of the sale price.
2.4 Is it always fully recoverable by all businesses If not,
what are the relevant restrictions
ST is always fully recoverable by businesses registered for ST
purposes. The tax to be paid is calculated by deducting the fiscal
credit from the fiscal debit. The fiscal debit is equivalent to
applying the 13% tax rate to all taxable sales made by the business.
The fiscal credit is calculated by adding all ST paid by the taxpayer
on all purchases and importations.
2.5 Are there any other transaction taxes
There are transfer and stamp taxes applicable to transfers of real
estate and vehicles, which must be registered before the Public
Register. The rates applicable are approximately 1.5% for real
estate and 2.5% for vehicles.
2.6 Are there any other indirect taxes of which we should be
aware
Excise duties are levied on the transfer of certain goods contained
in the law. The applicable rate depends on the type of good. This
tax is also applied to imports of merchandise included in said list.
Items exported by merchants are exempt. Custom duties are
payable on the importation of goods coming from outside Costa
Rica.
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