Published Thursday, November 26, 2020Deputies approve tax agreement
with the United Arab Emirates
By the A.M. Costa Rica staff
Deputies of the Costa Rican Congress approved a tax agreement between Costa Rica and the United Arab Emirates.
The bill, which passed with 44 deputies’ approval, is called "Approval of the Agreement between the Republic of Costa Rica and the Government of the United Arab Emirates."
In a statement, the congress said the agreement will eliminate the double collecting tax on income and capital gains, as well as preventing tax evasion.
According to deputy José María Villalta, the importance of the move is to guarantee the exchange of tax information that is under bank confidence between both countries, when it will be required by one of the governments.
This is the second advance in an international tax agreement this year.
In August, Costa Rica and the United States signed a complementary agreement to the Foreign Account Tax Compliance Act, FATCA.
According to the Ministry of Finance, the new agreement updates the Intergovernmental Agreement for the effectiveness of the Law on Tax Compliance regarding Foreign Accounts, signed by both parties in 2013.
It enables the General Directorate of Taxation in Costa Rica and the Internal Revenue Service in the United States to share financial information in order to guarantee transparency in the banking transactions that U.S. citizens carry out in Costa Rica.
In September, the agreement, signed by both the Minister of Finance, Elian Villegas, and U.S. Ambassador Sharon Day, allows the exchange of tax information between both countries.
According to the ministry, the U.S. FATCA Act, obliged banks and financial companies in Costa Rica to provide information related to specific accounts and financial products of U.S. citizens account holders that would be of interest for tax purposes.
Banks that do not comply with this report will be subject to a withholding tax of 30%, applicable on payments from the U.S. and designed for their clients, the ministry said.
"The signing of the FATCA agreement seeks to maintain the current standard of fiscal transparency established by the Organization for Economic Co-operation and Development, OECD, with respect to the exchange of information for fiscal purposes and mutual assistance," the ministry said in its statement.
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