Costa Rica offers a favorable environment for business development; however, companies operating within its borders must comply with various tax obligations. This article provides an overview of the primary taxes applicable to Costa Rican companies, based on the country’s current legislation, including the Ley del Impuesto sobre la Renta (Income Tax Law), Ley del Impuesto al Valor Agregado (Value-Added Tax Law), and other relevant regulations.

1. Corporate Income Tax

Corporate income tax applies to the worldwide income of companies domiciled in Costa Rica, as well as to Costa Rica-sourced income of foreign companies operating within the country. The tax rates are progressive, based on the company’s gross income.

This tax is calculated annually, with companies required to file returns by the end of their fiscal year. Additionally, companies must make quarterly advance payments (pagos parciales) based on estimated income.

2. Value-Added Tax (Impuesto al Valor Agregado, IVA)

The Value-Added Tax (VAT) is levied at a standard rate of 13% on the sale of goods and services in Costa Rica. Some goods and services are exempt or subject to reduced rates, including:

• 4% for private health services.
• 2% for goods in the basic food basket.
• 1% for certain medications and agricultural products.

Businesses must register for VAT, collect it from customers, and remit it to the Dirección General de Tributación (DGT) on a monthly basis. Input VAT on business expenses can be credited against output VAT, minimizing the overall tax liability.

The VAT amount is calculated by adding all fiscal debits (collected VAT) and subtracting all fiscal credits (paid VAT) on Form D-104. Prior to paying the tax, taxpayers may apply any fiscal credits in their favor. The resulting amount is the VAT to be paid to the Tax Administration.

3. Capital Gains Tax

The capital gains tax, established by Law 9365, Ley para el Fortalecimiento de las Finanzas Públicas (Law for the Strengthening of Public Finances), applies to both movable and immovable property.

A capital gain arises when there is a positive difference between the purchase value of an asset and its sale value. When the difference is positive, the gain is subject to a 15% tax rate. To calculate the capital gain, the purchase value, any investments or improvements made to the asset, and its sales value are considered. The 15% tax rate is applied to any positive difference.

4. Municipal Business Tax

Companies operating in Costa Rica are required to pay a municipal business tax to the local government where their business is located. The rate varies by municipality and is generally calculated as a percentage of the company’s gross income. Businesses must file periodic declarations with the municipality to determine the tax owed.

5. Customs Duties (Derechos de Importación)

Importing goods into Costa Rica incurs customs duties, which vary depending on the product’s classification under the Central American Tariff System (SAC). In addition to customs duties, VAT and selective consumption taxes may also apply to imported goods.

Quatro Legal has strategic alliances with key logistics firms that can assist with importing furniture or tools necessary for your business operations.

6. Social Security Contributions (Cargas Sociales)

Employers in Costa Rica are required to contribute to the social security system administered by the Caja Costarricense de Seguro Social (CCSS). The contributions include:

• 26.67% of employees’ gross salaries paid by the employer.
• 10.67% deducted from employees’ salaries.

These contributions fund various social programs, including healthcare, pensions, and workers’ compensation.

7. Real Estate Taxes (Impuesto sobre Bienes Inmuebles)

If a company owns real estate in Costa Rica, it must pay an annual property tax to the municipality where the property is located. Additionally, high-value properties are subject to the Solidarity Tax for the Strengthening of Housing Programs, which is applied at progressive rates.

8. Environmental Taxes

Certain activities and industries are subject to environmental taxes, including fees for water use, waste management, and activities that impact natural resources. These taxes aim to promote sustainable practices and are calculated based on specific parameters established by regulatory agencies. The applicability of these taxes will depend on the company’s commercial activity.

Conclusion

Operating a company in Costa Rica involves navigating a variety of tax obligations, including income tax, VAT, municipal taxes, and environmental levies. Compliance is essential to avoid penalties and ensure smooth business operations. Companies are encouraged to maintain detailed financial records and seek guidance from tax professionals to optimize their tax strategies and meet all legal requirements.

Felipe Esquivel C.
Paralegal

Disclaimer: The information provided in this blog post is for general informational purposes only and is not intended to constitute legal advice. While we strive to ensure the accuracy and timeliness of the content, laws and regulations are subject to change. For the most accurate and up-to-date information, please contact our office directly. Some images may be AI generated.