Costa Rica Coffee Guide

Legislative Assembly continues to debate tax affecting small businesses

August 27, 2010

 

Costa Rica’s Legislative Assembly continues to toy with the idea of taxing businesses registered as Sociedad Anónimas in order to strengthen citizen’s security and law enforcement programs.
 
The current plan is to introduce a $300 annual tax (¢154,371) with the goal of raising $159 million a year. Government officials say the tax also would help them clear the national registry of an estimated 532,000registered corporations, keeping only the ones that remain active.
 
But critics say the plan goes counter to President Laura Chinchilla’s promise to promote small and medium-sized businesses.
In July, she said, “The values on which small businesses are based have been fundamental in improving this country. In the next few years, (small businesses) will make up the essential core that guarantees that Costa Rica continues to see economic growth, solidarity and sustainable development.”
 
Recognizing the strain the tax could put on small businesses, Finance Minister Fernando Herrero said he would only support the levy if it exempts businesses with an income less than $100,000.
 
A Sociedad Anónima (S.A.) is the corporate framework most often used by small businesses and consultants, which allows them to officially register with the state and conduct business. Many foreigners, who lack legal residency or national identification, also use S.A.s to help them open a bank account or receive telecommunication services. 

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