Tax Relief Law Due to COVID-19
Costa Rican Congress is expecting to pass the bill 21.845, named “Tax Relief Law Due to COVID-19,” to establish a moratorium on payment of taxes for corporations as a result of the health crisis.
With this proposal, the government is looking to ease the tax burden on taxpayers. Among the measures, legislators also agreed to:
a. VAT Moratorium Period
Affected taxpayers must file their tax returns in April, May, and June 2020, while being temporarily exempted from the VAT during the months of March, April, and May 2020.
VAT of exempted months will need to be submitted at some point before December 31st, 2020, or obtain a payment plan with the Hacienda.
Starting January 1st, 2021, all those taxpayers who did not complete the payment will be liable for fines and penalties.
b. Exoneration of VAT for Commercial Establishments (PYMES).
Rents of commercial establishments are exempt from VAT as long as they are registered with the Hacienda as part of the General Regime or Special Agricultural Regime.
c. Exclusion of Partial Payments of Income Tax.
Taxpayers are exempt, for one time only, to make partial payments on Income tax in April, May, or June 2020.
This exemption does not apply to taxpayers with special fiscal periods previously approved by the Hacienda.
All other obligations on Income Tax remain the same.
d. Moratorium on Selective Consumption Tax (Import or Manufacturing of Merchandise).
Affected taxpayers must file their tax returns on March, April, and May 2020, while being temporarily exempted from payment of the same during April, May, and June 2020.
VAT of exempted months will need to be submitted at some point before December 31st, 2020, or obtain a payment plan with the Hacienda.
Starting January 1st, 2021, all those taxpayers who did not complete the payment will be liable for fines and penalties.
e. Moratorium on Duty Taxes.
Qualified taxpayers (registered with the Ministry of Hacienda) are allowed to nationalize their merchandise without paying duty charges during April, May, and June 2020.
This measure does not apply to agricultural and livestock products included in Chapter 1 to 24 of the Central American Tariff System.
VAT for exempted months will need to be submitted at some point before December 31st, 2020, or obtain a payment plan with the Hacienda.
Starting January 1st, 2021, all those taxpayers who did not complete the payment will be liable for fines and penalties.
f. Extension of Moratorium.
The President of Costa Rica is authorized to extend these measures for an additional month whenever necessary by means of issuing an Executive Order.
We will keep you informed of any amendments and provide an update as soon as the bill is published and enforced.