A recent publication by the official Newspaper ‘La Gaceta’ displays the publication of Section 9248, a re-vamp of pre-existing Section 9024 with greater Sanctions and stricter parameters for Corporations. This new body of law, as will become enacted and enforced starting September first of the present year, re-enacts Taxation for Corporations at the national level. As a result of the above, ending August of the present year all Corporations and Limited Liability Companies become bound to taxation once more.
While this is seen as progress by some of the advocates for Corporate Taxation and an achievement for the political parties involved at The State Level in the development and approval of this new instrument, there is some critic associated with this new tax. Is this going to yield a higher black figure among Corporations? What kind of effect is the new tax going to have in terms of competitiveness? How is this going to affect Small and Medium Sized Businesses?
While the new legal instrument allows an increase in Government Spending as a result of the new tax, it also creates a higher Barrier of Entry to the market for new companies, Small Businesses and Medium-Sized Businesses. The implementation of the new instrument in turn, is not accompanied by any form of State stimulus for business start-ups. Are users going to start to step away instead of complying as a result? The tendency in the past has been that users transition from having Commercial Corporations to having figures that don’t have to pay the tax instead such as Civil Corporations and EIRLS.
The implementation of the new tax is intended for the use of the Ministry of Public Safety. Specifically, the present budget intends to increase the number of hired police officers per capita, a subject matter criticized by this Editorial in the past. Nevertheless, its worth mentioning that the law in its own is a procedural achievement in the sense that the original one was deemed unconstitutional by Supreme Court of Justice.
There are also stricter parameters that stimulate transparency. Therefore, companies with income below eighty-eight thousand U.S. Dollars and economic activity (exchange rate to date bccr.fi.cr: Online), have to pay 25% taxation instead of 15% (Table 1-1). Is there a Breach of Article 28 of The Constitution due to its impact on Small and Medium-Sized Businesses in the new taxation scheme? The advocates of the law promote that it will stimulate a safer society and help reduce the bureaucratic load of paper-based companies. In concrete terms, infrastructure and equipment for police officers are the central argument for the implementation of the Corporate Tax.
Whether you agree or disagree the Enactment of the new Law is a fact. Effective its rule as of the publication in the official newspaper and enacted as of September first, all companies must pay taxation as follows:
Table 1-1. New Taxation Scheme according to Section 9248
Company Type Tariff Due
- No economic Activity (Inactive – DGT) 15% (63,930 CRC)
- Economic Activity, but no reported Income 15% (63,930 CRC)
- Economic Activity and Gross Income below $88k 25% (105,550 CRC)
- Economic Activity and Gross Income $88k to $205k 30% (127,860 CRC)
- Economic Activity and Gross Income above $205k 50% (213,100 CRC)