Since 2016, Costa Rica's Legislative Assembly approved, in the second debate, the Anti-Tax Fraud Bill, which aims to enhance tax transparency, reduce tax fraud, and ensure that businesses in Costa Rica comply with their tax obligations. In doing so, the bill seeks greater fiscal equity and better management of public resources.
This set of measures aims to transform Costa Rica’s tax system, focusing on transparency, tax compliance, and the fight against money laundering and tax evasion.
The bill, processed under file number 19245, introduced, among other things, a shareholder registry for capital companies in Costa Rica, with the goal of reaching the final beneficiary.
Time for Adjustments
Currently, the government of Costa Rica is working on a new Tax Fraud Prevention Bill, which includes a series of key measures designed to improve tax transparency and combat tax evasion. Some of its most important points are:
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Final Beneficiary Registry: The bill mandates that corporations maintain a final beneficiary registry, meaning they must identify the individuals who ultimately control or benefit from the company, rather than simply registering shareholders. The main objective of this registry is to ensure transparency and prevent companies from being used for illicit activities such as money laundering and tax evasion.
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Conditions for Dealing with Public Entities: In order to process permits, licenses, and concessions with public institutions, businesses must be up to date with their tax payments. This ensures that companies meet their tax obligations to access public services and benefits.
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VAT Refunds: The bill allows businesses to receive a refund of Value Added Tax (VAT) if they are up to date with their tax payments. This provision aims to incentivize tax compliance and ensure that businesses make their operations transparent in order to benefit from this refund.
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Enhanced Tax Auditing Tools: The bill introduces several measures and additional tools to improve tax auditing and enforcement by the authorities. This includes strengthening the administrative capacity of the state to detect and penalize tax fraud.
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Stricter Penalties: In cases of non-compliance with the bill’s provisions, harsher penalties will be imposed on businesses and individuals involved in fraudulent practices or tax evasion. These penalties will apply both to the businesses and their responsible parties.
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Review and Update of Regulations: The bill also proposes the periodic review and updating of the regulations related to the fight against tax fraud, ensuring that they can adapt to new forms of tax evasion and avoidance.
Finally, the Costa Rican government is taking decisive steps to strengthen tax transparency, reduce fraud, and ensure tax compliance by businesses. These measures aim not only to guarantee greater fiscal equity but also to optimize the management of public resources. With this approach, the government seeks to create a more just and efficient environment for business development in the country. It is crucial that businesses stay informed about these changes and prepare to adapt to the new regulations.
For more information on how the Tax Fraud Prevention Bill might affect your business in Costa Rica, contact our members Ara-Law Abogados located in San José, Costa Rica, for expert advice.