| Published Wednesday, January 27, 2021
Public organizations could pay 30% profit tax
By the A.M. Costa Rica staff
The government, through the Ministry of Finance, presented to Congress bill No.22,384, which seeks to collect a maximum of 30% tax on the profits reported by public organizations.
According to the ministry, if deputies approved the bill, the tax will be applied for four years, to generate income for the government to face the crisis generated by the pandemic.
The tax could produce annual revenues to the government of approximately 0.20% of the Gross Domestic Product, which would be used to pay the government's debt, the ministry said in its statement.
Public organizations that will pay the tax are Banco de Costa Rica, Banco Nacional, Insurance Institute, Railways Institute, among many others. After the law is approved, the percentage of profit tax will be established for each organization, which will not be higher than 30%.
The bill also establishes the prohibition for public organizations to change, modify, or in any way vary their cost structures to transfer the tax to its clients (consumers). There should be no changes in the rates of public services provided by public organizations.
This is the third bill presented by the government as part of the requirements to reach an agreement with the International Monetary Fund, IMF, to obtain a loan of $1.7 billion.
Another bill was passed to Congress to create a new income tax.
According to the ministry, the bill will apply a tax of 10% and up, to everyone who gets an approximate annual income of $13,403 or more.
The bill also allows workers to reduce, from their annual income, a portion of their basic expenses such as house rent, medical expenses, among others.
Last week another bill was introduced to Congress. This one seeks to create a new tax targeting Luxury homeowners.
Bill No.22382, "Tax on luxury properties" would have owners pay an annual 0.5% tax for properties whose value is equal to or higher than approximately $245,379. “This tax applies to every house, urban or rural located, that contains one or more buildings that constitute the property, used as a regular, occasional or recreational home, even if it is located on independent farms or in singular buildings,” according to the bill text.
The new tax is exempted to homeowners if the property carries out productive activities such as agricultural, livestock, forestry, natural resource conservation, agro-industrial or commercial activities.
According to the ministry, the new tax will generate an income for the Housing Mortgage Bank of approximately $6.5 million. The bank is a public organization in charge of facilitating loans for the construction of houses.
The bank provides financing to public aid programs for the eradication of informal settlements, so-called “slums'' and donates housing to people living in poverty.
If Congress approves this bill, the luxury homes tax will replace the current one which had to be paid before Jan. 15 to avoid penalties.
------------------- How are new taxes considered a smart strategy to close the loan agreement with the IMF? We would like to know your thoughts on this story. Send your comments to news@amcostarica.com
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