If The Law Creating the Corporations Tax Is Unconstitutional, Why Do I Have To Pay?

If you own a corporation in Costa Rica – an S.A. (Sociedad Anomina) – you know well that there is a corporations tax payable by end of January every year for the last few years.

Many foreigners (and locals) who hold their car, property or any other item of value in an S.A. and are subject to the tax.

But hold a minute, do we really have to pay now that the Constitutional Court (Sala Constitucional or Sala IV) ruled the law creating the tax null and void?

The tax was introduced by the Chinchilla administration (2010-2014) in 2011. Since we’ve bee required to pay the equivalent of a base salary (¢201.700 for the 2015 fiscal period) for each and every active corporation (half of that for inactive).

But now that  Court said the law is unconstitutional, the experts say that means the law never existed on the books.

However, despite the voidance, we are being required to pay the tax, this the last year, and nothing more starting for 2016 fiscal period (Feb 1, 2015 to Jan. 31, 2016).

WAIT. If the law creating the tax is null and void, then isn’t the 2015 tax payment also nulled? Herein lies the problem.

The Ministry of Finance (Ministerio de Hacienda) says non-payment will incur fines. The Registro Nacional (National Registry) says it cannot issue  certifications if the tax payment is not up to date.  Again, both government agencies are asking for the payment of a tax that, if the experts are right, in law it never existed.

Jose Maria Oreamuno, tax expert at Facio & Cañas. Click here to see the video interview from Telenoticias.
Jose Maria Oreamuno, tax expert at Facio & Cañas. Click here to see the video interview from Telenoticias.

I happened to catch an interview on Telenoticias where one legal expert, Jose María Oreamumo at Facio & Cañas, one of the leading legal firm in the country, saying: “Do not pay, the law never existed and no government agency can require payment for someting that didn’t exist.”

You can see the interview (in Spanish) by clicking here. Skip to minute 1:25.

As of this morning, according to official records, only 13% of the corporations have had their tax paid, leaving 87% or roughly 475.000 of the 542.000 that have not done so.

My questions are:

  1. What happens if I don’t pay the tax?
  2. What if the Court rules that the 2015 doesn’t really have to be paid, do I get back a refund if do pay?
  3. If the law is unconstitutional, why do I have to pay the arrears (for those like me who are in arrears)

Me, I am going to wait for I have learned that in Costa Rica:

  • Never be the first to pay anything, ie. fines, taxes, etc.
  • Wait to the very last minute to pay anything
  • Don’t every pay when there is doubt/controversy whether I should pay
  • Never is a refund issued

I am not offering legal advice, just sharing my thoughts on the issue.

Pura Vida, Mae!

Time for a yodo.





Written by Rico


"In my spare time I'm a really nice guy!" RICO is the crazy mind behind the Q media websites, a series of online magazines where everything is Q! Rico brings his special kind of savvy to online marketing. His websites are engaging, provocative, informative and sometimes off the wall, where you either like or you leave it. The same goes for him, like him or leave him.There is no middle ground. No compromises, only a passion to present reality as he sees it!