Costa Rica Updates Income and Salary Tax Brackets and Rates for 2022

On December 22, 2021, the Costa Rican government and the Ministry of Finance posted a decree which updates the tax brackets for both salary and income and tax credits.

Decree No. 43375-H details the new amounts based on an adjustment of 2,5% on taxes on wages, income and tax credits for the 2022 period, in comparison to those of 2021.

According to this decree, said adjustments are being enforced since January 1, 2022, so in this article we will make a small summary of what these updates are and what will be the amounts established and that are current since that date.

Salary tax

Concerning the salary tax, the decree determined the following amounts as subject to said tax:

• Any salary less than or equal to 863.000 colones will not be subject to this tax.

• Any salary greater than 863.000 colones, but less than 1.267.000 colones will be subject to a 10% tax rate.

• Any salary greater than 1.267.000 colones, but less than 2.223.000 colones will be subject to a 15% tax rate.

• Any salary greater than 2.223.000 colones, but less than 4.445.000 colones will be subject to a 20% tax rate.

• Any salary that is greater than 4.445.000 colones will be subject to said tax and will have a tax rate of 25%.

Income tax

Similarly, another of the taxes that was adjusted starting 2022 is the income tax, which also has changes in the sections and the amounts.

This tax is divided into two, since there is an amount established for legal persons and another one for individuals who carry out economic activities in the country.

According to the decree, legal entities will be subject to the payment of income taxes depending on their annual income statement. These are the rates and the brackets for legal persons with income statements below 112.070.000 colones:

• 5% on the first 5.286.000 colones of the annual income statement.

• 10% when the annual income statement is greater than 5.286.000 colones, but less than 7.930.000 colones.

• 15% when the annual income statement is greater than 7.930.000 colones, but less than 10.573.000 colones.

• 20% when the annual income statement is greater than 10.573.000 colones.

Economic activity

In the case of natural persons who carry out economic activity (industrial or agricultural, for example), the income tax will be paid as follows for the 2022 period:

• Annual income declarations that are not greater than 3.836.000 colones will not be subject to the payment of this tax.

• Annual income declarations greater than 3.836.000 colones and up to 5.729.000 colones will pay a 10% tax.

• Annual income declarations greater than 5.729.000 colones and up to 9.555.000 colones will pay a 15% tax.

• Annual income declarations greater than 9.555.000 colones and up to 19.150.000 colones will pay a tax of 20% of this tax.

• Annual income declarations greater than 19.150.000 colones will pay a tax of 25% of this tax.

Tax credits

In the same way, the tax credits were also adjusted in the sections and amounts that will be subject to the payment of these taxes, this according to the provisions of article 34 of the income tax law No. 7092.

Tax credits are divided in two, since there are amounts established in the case of legal entities that are different from the amounts for individuals who carry out economic activity.

The amounts established for compliance with said tax for natural persons are:

• For each child, the sum of 1.610 colones.

• For the spouse, the sum of 2.430 colones.

In the case of legal persons with economic activity, the amounts are as follows:

• For each child, the tax credit will be for an amount of 19.320 colones, which is the amount established by article 34 of said law on an annual basis, that is, multiplied by the 12 months of the year.

• For the spouse, the tax credit will be for an amount of 29.160 colones, which is the amount established in article 34 of said law on an annual basis, that is, multiplied by the 12 months of the year.

We hope that this article will help you to comply with these obligations and learn how much we must contribute with these new adjustments tosalaries and income statements. If you have any questions, let us know and we will be happy to assist you.