Costa Rica legal and accounting and tax considerations in 2024

1. The standard corporate tax rate in Costa Rica is levied at the rate of 30%. Companies whose gross income is less than US$98,770 are subject to a reduced tax rate of 10% and companies whose gross annual income is less than US$198,700 are subject to 20%. The fiscal year runs from 1^st October to the 30^th September so taxes must be filed within two months and fifteen days after the end of the tax year. Taxes are paid in quarterly installments and a late payment penalty equal to 1% of the tax due is levied for each month outstanding up to a maximum of 20%;
2. Branches of foreign companies pay corporate tax at the rate of 30% plus an additional 15% on remittances
3. Industrial, processing and service companies located in the free trade zones are entitled to tax holidays of up to 100% exemption from corporate income tax for the first eight years of operation and 50% exemption for the next four years;
4. Industrial companies may carry forward losses incurred in their first five years of operation for five years and losses incurred in the subsequent years may be carried forward for three years. Agricultural companies may carry forward losses for five years. Carryback of losses is not permitted;
5. For payments to non-resident foreigner’s corporations and resident individuals, taxes are withheld at i) 15% on dividends ii) 15% on interest iii) 25% on royalties iv) 8.5% on transport and telecommunications v) 10% on salaries and pensions vi) 15% on fees and commissions vii) 5.5% on reinsurance viii) 20% on news services, videos and films;
6. Employers are required to make social security contributions at a rate of 26.17% of the employees basic salary income;
7. Other taxes include i) sales tax at 13% ii) real estate transfer tax at 1.5% iii) vehicle transfer tax at 2.5% iv) customs duties on agricultural products at 12.72% v) customs duties on industrial products at 4.69% vi) real estate tax collected by the municipalities at 0.25%;
8. Costa Rica has only signed one income tax treaty and that is with Spain;
9. Healy Consultants Compliance Department will assist our Clients with i) documenting and implementing accounting procedures ii) implementing financial accounting software iii) preparation of financial accounting records and iv) preparing forecasts, budget and sensitivity analysis;
10. It is important our Clients’ are aware of their personal and corporate tax obligations in their country of residence and domicile; and they will fulfill those obligations annually. Let us know if you need Healy Consultants’ help to clarify your annual reporting obligations.