2. Income Tax Reform
The Tax Reform Law would modify certain provisions of the existing income tax law as follows:
The Tax Year
Currently the Costa Rican tax year ends on September 30th. This would change to a calendar based tax year so that it would run from January to December.
The Tax Rates For Corporate Entities
The corporate tax rates would be as follows:
Corporate Tax rate is 30%
If Gross Income is less than 106 million colones/ $185,964 during the fiscal year then the following tax rates apply:
- 5% on the first ¢ 5 million/ $8,771 annual net income.
- 10% on the excess of ¢ 5 million/$8,771 and ¢ 7.5million/ $13,157 of annual net income.
- 15% on the excess of ¢ 7.5 million/ $13,157 and up to 10 million/ $17,543 annual net income.
- 20% on the excess of ¢ 10 million colones/ $17,543 of annual net income.
Small businesses which are registered before the Ministry of Economy, Industry and Commerce, or before the Ministry of Agriculture , may apply the following scales:
- 0% of the tax on the profit tax in the first year of commercial activities;
- 25% of the tax on the profit tax in the second year of commercial activities;
- 50% tax on the profit tax in the third year of commercial activities.
The Tax Rate For Individuals
- Income of up to ¢ 3,339,000/ $5,857 per year, will not be subject to tax.
- On the excess of ¢ 3,339,000/ $5,857 per year and up to ¢ 4,986,000/ $8,747 per year is 10%
- On the excess of ¢ 4,986,000/$8,747 per year and up to ¢ 8,317,000/ $14,591 per year is 15%
- On the excess of ¢ 8,317,000/$14,591 per year and up to ¢ 16,667,000/ $29,240 per year is 20%
- On the excess of ¢ 16,667,000/ $29,240 annually is 25%
Once the tax has been calculated, the individuals who carry out lucrative activities will be entitled to the following tax credits:
- For each child the tax credit will be ¢ 16,920/ $29.68 per year
For the spouse the tax credit will be ¢ 25,320/ $44.42 per year
Credit to CostaRicaLaw.com
