INCOME TAXES ON CORPORATIONS
1. Rates
All corporations pay income tax at 30% on net profits. Small companies, defined as enterprises having gross income up to ?7,500,000, pay the following rates:
Up to ?,700,000 gross income 10%
Up to ?7,500,000 gross income 20%
The preceding bracket was in force until September 30, 1996. Effective October 1, 1996, the gross income was increased to ?0,475,000 with the following rates:
Up to ?0,179,000 gross income 10%
Up to ?0,475,000 gross income 20%
For tax purposes, the term corporation?broadly covers stock
companies, limited partnerships, general partnerships, joint stock companies, trust companies, foreign branches, and, in addition, undivided inheritances under probate and temporary associations, whether legalized or not.
2. Local Income Taxes
Different rates exist for each county.
3. Capital Gains Taxes
None.
4. Branch Profits Taxes
Branches of foreign companies are subject to the same income tax rates as corporations on their local net profits. In addition, the net profit
after income tax is subject to an automatic withholding tax of 15%.
5. Foreign Tax Reliefs
Residents of Costa Rica are not taxed on foreign-source income and no foreign tax relief is provided.
7. Payment of Taxes
The tax year runs from October 1 to September 30 of the following year, and tax returns are due three months following the tax year-end. The tax is payable during the 30 days following the return filing; there are regulations concerning withholdings and partial payments.
The tax year can be changed if the holding company has a different year-end or the company activity requires it (banks, rice industry, etc.).
INCOME TAXES ON INDIVIDUALS
9. Rates
There is a tax on monthly salaries and other personal income, as follows:
Taxable Income
Percentage
Over Not Over on Excess
?131,000 ? 197,000 10%
197,000 15
The preceding bracket was in force until September 30, 1996. Effective October 1, 1996, the taxable income was increased to ?30,000 with the following rates:
Taxable Income
Percentage
Over Not Over on Excess
?153,000 ? 230,000 10%
230,000 15
Tax credits are allowed for:
q Spouse ??00 per month;
q Child ??50 per month.
Other payments, such as a bonus or gift, are taxed at the rate of 10%.
Tax Rates for Self-Employed Persons. All those individuals doing business in their personal names are subject to the following annual rates:
Taxable Income
Percentage
Over Not Over on Excess
? 580,000 ? 868,000 10%
868,000 1,448,000 15
1,448,000 2,902,000 20
2,902,000 25
The preceding bracket was in force until September 30, 1996. Effective October 1, 1996, the taxable income was increased to ?,395,000 with the following rates:
Taxable Income
Percentage
Over Not Over on Excess
? 679,000 ? 1,016,000
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