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    - Photo via Asamblea Legislativa de Costa Rica -
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Published on Thursday, September 7,
2023
By the A.M. Costa Rica staff
The
new law to meet the standards
sought by the European Union
to remove the country from the
gray list is pre-approved by
Congress in the first round of
voting, with 28 deputies
voting in favor. The
gray list is also known as the
EU list of non-cooperative tax
jurisdictions. The list is
part of the European Union's
efforts to combat tax evasion
and avoidance. According
to Congress's statement, the
new law No.23.581 intends to
prevent European residents
from utilizing the country to
avoid paying taxes in their
own countries. The
revised law is expected to
pass in a second round of
votes in Congress. If it is
adopted, Costa Rican companies
with European investments must
pay income taxes in the
country where they are
registered in Europe rather
than in Costa Rica.
Furthermore, the law prohibits
the Treasury from taxing Costa
Ricans who make earnings
abroad. Costa
Rica's name will be removed
from the list if it passes a
new law that meets all EU
commitments.
However, Nogui Acosta, Minister of Finance, stated that the new law's content could harm the country's finances since taxpayers with income in Europe may decide to pay taxes in their own nations rather than Costa Rica. Faced with the possibility of jeopardizing the state's finances, Acosta said that the administration might oppose the passage of this new law.
Costa Rica was included on the list for the first time in February because it has not fulfilled its pledge to remove or reform the damaging parts of its foreign source income exemption regime.
The EU list now includes American Samoa, Anguilla, Bahamas, Fiji, Guam, Palau, Panama, Samoa, Trinidad and Tobago, Turks and Caicos Islands, US Virgin Islands and Vanuatu, British Virgin Islands, Marshall Islands and Russia.
Listed countries either have not engaged in a constructive dialogue with the EU on tax governance or have failed to deliver on their commitments to implement the necessary reforms.
"Those
reforms should aim to comply with a
set of objective tax good governance
criteria, which include tax
transparency, fair taxation and
implementation of international
standards designed to prevent tax
base erosion and profit shifting,"
the EU said in its statement. ---------------
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