Corporate Tax 2010 - BMR Advisors

Arias & Muñoz
Costa Rica
5 Capital Gains
6.3 How would the taxable profits of a local branch be
determined
5.1 Is there a special set of rules for taxing capital gains and
losses
Yes, capital gains are not taxed. Therefore, capital losses may not
be deducted.
5.2 If so, is the rate of tax imposed upon capital gains
different from the rate imposed upon business profits
Not applicable.
5.3 Is there a participation exemption
There is no participation exemption.
The taxable profits of a local branch are determined just the same
way as with a subsidiary. The 30% income tax rate applies on net
income (gross income less deductible expenses). There are no
special tax regimes for local branches of foreign companies.
6.4 Would such a branch be subject to a branch profits tax (or
other tax limited to branches of non-resident companies)
The remittance of branch profits to the head office would be subject
to a 15% tax on the gross payment, which must be totally withheld
at source by the local entity.
6.5 Would a branch benefit from tax treaty provisions, or some
of them
Costa Rica
5.4 Is there any special relief for reinvestment
No, because there are no tax treaties in effect in Costa Rica.
No, Costa Rica has no relief for reinvestments.
6 Branch or Subsidiary
6.6 Would any withholding tax or other tax be imposed as the
result of a remittance of profits by the branch
See the answer to question 6.4.
6.1 What taxes (e.g. capital duty) would be imposed upon the
formation of a subsidiary
7 Anti-avoidance
No taxes are imposed upon the formation of a subsidiary.
Registration costs are approximately $70.
6.2 Are there any other significant taxes or fees that would be
incurred by a locally formed subsidiary but not by a
branch of a non-resident company
There are no other significant taxes or fees.
7.1 How does Costa Rica address the issue of preventing tax
avoidance For example, is there a general anti-avoidance
rule or a disclosure rule imposing a requirement to
disclose avoidance schemes in advance of the company’s
tax return being submitted
Costa Rica has criminalised tax evasion by means of a general rule
determining when tax avoidance is deemed to have taken place.
Such avoidance has to be proven in court by the tax authority.
ICLG TO: CORPORATE TAX 2010
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