Two days after Christmas 2011, La Presidénte Laura Chinchilla gave many people in Costa Rica a belated present. She signed into law yet another tax. This one is aimed at a long-standing tradition here for protecting one's assets, namely Socieadades Anonomias, in English, corporations. The use of corporations, especially inactive ones, is quite common among those who wish to protect assets in this country. Usually, it's your house and cars that need some protection from lawsuits and most of these corporations have no other purpose than holding such assets. One for each car, one for each house, etc.
I really have no idea what proportion of Ticos use corporations in this manner, but it is routine for the gringos. They are also used to establish yourself as a "person" to the government, which, sans residency, allows you to set up bank accounts, get utilities, etc. This is what's known as a Persona Juridica.
The C.R. government often sets its sights on us, since we are, in general, more affluent than the majority of the population, and of course we can't vote. Their assumption that we are a bottomless well of booty ignores the probability that as C.R. piles on scheme after scheme to garner some extra cash from the gringos (e.g., the "luxury home tax", which was a complete disaster) that poco a poco they make their country a little less desirable to prospective foreign residents, who bring in a lot of much needed capital, which gets distributed to local populations in many ways much more efficiently than government programs.
The tax itself (about $360 per active corp., half that for inactive corps, per year) may not seem like a lot but if you have 3 or 4 of these it adds up. What do we get for that money? Supposedly, it goes for additional "security" programs, which includes security details for domestic Presidential trips, by the way.
The good news this year is that since the law can't take effect until April 1st they can only charge 9 months worth in 2012. You have 30 days to pay. You have 90 days after April 1st to dissolve any corporation to avoid the tax. The Colegio de Abogados (equivalent to the Bar Association) recommends that the minimum fee to dissolve one's corporation be $150. This year, at least, you really can't win money-wise.
I'm not convinced at all, however, that one can't do 90% of the job of corporate dissolution oneself and just pay for getting the Notary stamp on the documents. Also, one question the article did not address is what happens if you just blow off the tax (at least on any corp. that you'd dissolve anyway)? I mean, it's not you personally who owes the tax. It's the corporation. So, who cares if there is a fine on a corp. you're not going to use anyway. I'd like to explore that option a bit more before committing to that idea, of course.
I really have no idea what proportion of Ticos use corporations in this manner, but it is routine for the gringos. They are also used to establish yourself as a "person" to the government, which, sans residency, allows you to set up bank accounts, get utilities, etc. This is what's known as a Persona Juridica.
The C.R. government often sets its sights on us, since we are, in general, more affluent than the majority of the population, and of course we can't vote. Their assumption that we are a bottomless well of booty ignores the probability that as C.R. piles on scheme after scheme to garner some extra cash from the gringos (e.g., the "luxury home tax", which was a complete disaster) that poco a poco they make their country a little less desirable to prospective foreign residents, who bring in a lot of much needed capital, which gets distributed to local populations in many ways much more efficiently than government programs.
The tax itself (about $360 per active corp., half that for inactive corps, per year) may not seem like a lot but if you have 3 or 4 of these it adds up. What do we get for that money? Supposedly, it goes for additional "security" programs, which includes security details for domestic Presidential trips, by the way.
The good news this year is that since the law can't take effect until April 1st they can only charge 9 months worth in 2012. You have 30 days to pay. You have 90 days after April 1st to dissolve any corporation to avoid the tax. The Colegio de Abogados (equivalent to the Bar Association) recommends that the minimum fee to dissolve one's corporation be $150. This year, at least, you really can't win money-wise.
I'm not convinced at all, however, that one can't do 90% of the job of corporate dissolution oneself and just pay for getting the Notary stamp on the documents. Also, one question the article did not address is what happens if you just blow off the tax (at least on any corp. that you'd dissolve anyway)? I mean, it's not you personally who owes the tax. It's the corporation. So, who cares if there is a fine on a corp. you're not going to use anyway. I'd like to explore that option a bit more before committing to that idea, of course.
Casey - my understanding (which is suspect I admit) is that if the tax is delinquent for three years then the government will take the assets in the corporation. I think this is all going to be a work in progress for some time........
ReplyDeleteCasey, your questions will be answered in my article here:
ReplyDeletehttp://american-european.net/article-how-does-the-corporation-tax-in-costa-rica-interfere-with-your-business-121.html
Hopefully Sala IV will do to this new tax what they are doing to MOPT's ill-conceived traffic law with its draconian fines. In other words, gut it to send a message to the legislature that they need to re-think it.
ReplyDelete