Update: Tax Declaration of Inactive Corporations
A new form is being introduced for filing the annual tax declaration of inactive corporations in Costa Rica.
As advised in a November 2022 Howler article, Costa Rica’s tax authority, Ministerio de Hacienda, has extended the due date for the first filing of the “Informative Declaration of Inactive Companies in Costa Rica” to April 30, 2023. The applicable resolution DGT-R-033-2022 was published on November 9, 2022 in La Gaceta number 214.
This coincides with the new D-195 tax form becoming available for companies and corporations registered in Costa Rica’s Single Tax Registry (RUT) with the activity code “960113,” which stands for “inactive company.” Inactive corporations will no longer use the same tax form D-101 that active corporations use.
Inactive corporations are “… those companies incorporated in the country that do not have lucrative nor income-producing activity of a Costa Rican source.” That means the company is incorporated to register is incorporated to register assets in its names, such as vehicles or properties, and does not carry out any economic activity.
On January 30, 2023, the Ministerio de Hacienda published a draft of the proposed new regulation for tax filing by inactive companies. It provided 10 business days for anyone to submit their comments or observations.
We need to wait until the regulation is formally approved and see what changes will be made to the initial proposal. However, we will share with you below the relevant key aspects:
- Inactive companies would no longer use the same tax form D-101 that active companies with lucrative activity use, but rather a specific form called “Informative Declaration of Inactive Legal Entities D-195.”
- The legal representatives shall submit the tax form by April 30 of each calendar year.
- The summarized informative form D-195 must reflect the corporate assets and obligations corresponding to the ordinary fiscal period of the tax on the previous year’s profits, which covers from January 1 to December 31 of each year.
- The D-195 will be available on the digital platform “Virtual Tax Administration (ATV)” from the official Ministerio de Hacienda website.
- Non-compliance will carry heavy fines and penalties.
- Companies that receive capital income subject to unique and definitive withholdings, to avoid being considered inactive, must register the activity they carry out in the Single Tax Registry (RUT). Their address, email, and other required data must be kept up to date.
- The tax administration will unregister ex officio the companies that have been legally liquidated or dissolved with the mere verification of their legal status duly registered before the Mercantile Registry of the National Registry.
- Effective on the date of the approved resolution, inactive corporations that have already complied with their informative tax declaration obligation for the ordinary fiscal periods 2020, 2021 and 2022 — using form D-101 — will not have to file it again using form D-195.
Please consider that you must hire a CR accountant to submit this tax filing, as the balance sheet and corporate accounting records are mandatory. Your accountant or authorized person will access the ATV tax site for online tax submission to submit the forms on behalf of your corporation.
The corporate books shall be updated with the same information declared on the tax forms to reflect all agreements related to the corporation’s balance, assets, liabilities, and equity value.
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