Worldwide transfer pricing reference guide 2014

Costa Rica
Taxing authority and tax law
Taxing authority: Tax Administration of Costa Rica (Dirección General de Tributación, or DGT).
Tax law: Executive Decree No. 37898–H, Articles 1 to 11.
Relevant regulations and rulings
Executive Decree No. 37898–H (the TP Executive Decree), that adopts transfer pricing regulations applicable to individuals or business
entities that conduct related party transactions, came into effect in Costa Rica on 13 September 2013.
Costa Rican transfer pricing provisions are mainly based on the OECD Guidelines and apply to all the transactions conducted by Costa
Rican taxpayers with related entities resident abroad and within Costa Rica. The provisions also present an additional non-OECD method
(the valuation of goods with international quotations method), that could be applied as an alternative to the CUP method.
The TP Executive Decree is effective upon its publication in the Official Gazette. Further regulation is expected in order to complement
the TP Executive Decree.
OECD Guidelines treatment
Costa Rica is currently not an OECD member, but it is in the process of being evaluated for admission. There is no reference to the OECD
Guidelines in the TP Executive Decree. However, in general local regulations follow the OECD standard. In addition, the OECD Guidelines
have been mentioned and used as a reference in official audits and court resolutions.
Priorities/pricing methods
The TP Executive Decree requires the application of the most appropriate transfer pricing method. The specified methods used are:
CUP, Resale Price, Cost Plus, Profit Split, TNMM and the valuation of goods with international quotations method that could be applied as
an alternative to the CUP method.
Transfer pricing penalties
No express monetary penalties are applied when taxpayers fail to maintain contemporaneous transfer pricing documentation or transfer
pricing information return. Nevertheless, the monetary penalties for noncompliance set forth in the Tax Code of Standards and
Procedures should apply by default.
Penalty relief
There is currently no penalty regime in place.
Documentation requirements
Contemporaneous transfer pricing documentation related to domestic and cross-border related party transactions must be maintained
in Spanish. The documentation must include the name, address and tax residency of the related persons with whom transactions are
carried out, as well as the correct application of an approved method as stated in the TP Executive Decree. It is necessary to include
in the documentation, information regarding functions performed, assets used and risks borne by the taxpayer involved in each
transaction. Information and documentation on comparable transactions or companies must also be included.
Documentation deadlines
Taxpayers must prepare and maintain transfer pricing documentation on an annual basis. The TP Executive Decree does not state
a deadline but rather indicates that further regulation would be provided in order to establish the due dates for documentation.
The documentation must be at the disposal of the DGT upon request.
Statute of limitations on transfer pricing assessments
The standard statute of limitations on general tax assessments of four years should apply. This statutory period is extended to 10 years
for unregistered taxpayers, fraudulent returns filed and for failure to file. The term is also extended in cases of amended returns.
Worldwide transfer pricing reference guide
73