Consequences of Tax Reform in Costa Rica

In order to remove banking secrecy, all that is needed is that the required information presumably serves to determine compliance with tax obligations.

Friday, August 3, 2012

An article in Nacion.com discusses two bills recently approved on the first reading by the Costa Rican Legislative Assembly: the Law for Strengthening the Tax Administration and the Law on Fiscal Transparency.

"In the Transparency bill, there is a relaxation of the ability of the Administration to gain from financial institutions information concerning customers tax, both passive and active. Very specifically, it is not necessary that there be evidence of commission of a serious illegal taxation, it is sufficient that the information is foreseeably relevant to the determination of compliance with tax obligations.

"Regarding the strengthening project, there are three axes: modifications to administrative penalties, allowing the imposition of higher fines, and imposing custodial sentences for more serious offenses; modification of the administrative procedure for determining obligations, with the most noteworthy point being its inception through a determinative act - no longer the act known as Charge-transfer - and the obligation to pay or provide a deposit for access to the appeal system.

More on this topic

Fiscal Transparency Law in Costa Rica

August 2012

Two legal projects have been approved on fiscal transparency and fiscal management, including streamlined procedures for lifting bank secrecy.

A statement from the Ministry of Finance of Costa Rica reads:

TREASURY CELEBRATES APPROVAL OF FISCAL TRANSPARENCY AND STRENGTHENING OF TAX MANAGEMENT

Increased Penalties for Faulty Tax Returns

October 2012

In Costa Rica, the new tax law increases the penalties for mistakes and omissions in income tax statements.

Effective from September 28, the Law for Strengthening Tax Management and Law for Enforcing Standards of Fiscal Transparency in some cases doubles fines to be paid for misreporting.

Amendments to Tax Laws in Costa Rica

October 2012

"The odious ‘solve et repete’ ... is a means often used to cover administrative arbitrariness and makes defense of the taxpayer something illusory."

The quote comes from an the article in Elfinancierocr.com citing the OEA/BID Model Latin American Tax Code of 1968, which the author points to as the basis of the Code of Tax Rules and Procedures of Costa Rica.

Costa Rica: Discussion on Bank Secrecy Relegated

July 2011

The urgency to pass the tax reform, among other things, has taken center stage in the government's agenda of issues.

The removal from the list of countries classified as tax havens, and the priority that the government has given other issues has meant that the discussion and approval of the Law on Fiscal Standards and Transparency, which contemplates the possibility of lifting the secrecy in banking in certain cases has been relegated.

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