New Tax Law

New Tax Law

Tax & Tax Adjustment Laws

On September 1995 a main set of reforms to the prevailing tax structure was issued. These are the tax law (Ley de Justicia Tributaria) and Tax Adjustment Law (Ley de Ajuste Tributario).

Both these Laws impose severe administrative fines, administrative penalties and criminal prosecution for failing to comply with the income reporting requirements established by law.


Income Tax

Applied to individuals as well as legal entities, i.e., corporations for income originated from a Costa Rican source. Costa Rican Laws do not tax income derived from a foreign source.

According to the Law all of the following are subject to income taxation:

  • Legal entities, the facto corporation, professional companies, and state enterprises which operate in the country;
  • Branch offices, subsidiaries, or agencies of any non-resident which operates in the country;
  • Trusts;
  • Inheritances (as long as remaining indivisible);
  • Individuals residing in Costa Rica regardless of nationality;
  • Individuals hired in a professional occupation;
  • Physical and legal entities not specifically mentioned and engaged in profit making activities in Costa Rica.