Respecting accounting regulations is one of the most important aspects when starting a business in Costa Rica. There are several taxes you must pay no matter if you are a natural person or if you run a company, and one of the most important is the income levy.
Below, we explain the taxation system of this country, as well as the services our accountants in Costa Rica can provide you with.
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Compliance requirements in terms of accounting in Costa Rica
Just like in other countries, Costa Rica’s accounting requirements apply to individuals and companies. They must respect the following regulations:
- register for taxation in order to be able to keep account of their incomes legally;
- register for VAT which mainly applies to companies;
- enroll with various authorities in order to pay various levies, based on their status for people and operations for companies;
- file their tax returns in due time;
- make the payment of the taxes in accordance with the Costa Rican laws.
If you need assistance in any of these matters, our Costa Rican accountants are at your disposal.
Our services also extend to foreigners who come to this country based on Costa Rican residence permits.
Tax registration as part of accounting in Costa Rica
In order to comply with the accounting regulations of Costa Rica an individual or a company must register for taxation. For natural persons, the procedure is quite simple, as they can do that as employees or self-employed/self-occupied people. For foreigners, the rule of tax residency must be respected. This refers to spending at least 183 days in a calendar year to be considered a resident of Costa Rica.
For companies, tax registration is completed at the same time as company incorporation in Costa Rica. Local and foreign-owned businesses will be issued tax identification numbers based on which they can further register for VAT.
Should you need assistance in this matter, you can address our accountants in Costa Rica.
Tax payment requirements in Costa Rica
The most important aspect related to accounting in Costa Rica is that starting with the 1st of January 2023, the income tax applied to individuals and companies is levied at new rates.
From this point of view, companies must consider the following:
- the corporate tax for companies with annual gross income of a maximum CRC 122,145 (USD 204,611) ranges from 5% to 20%, where the upper limit of minimum threshold is CRC 5,761 (USD 9,650);
- companies that exceed the CRC 122,145 threshold will be applied a 30% rate on the gross yearly income;
- sole traders must pay the income tax at rates ranging from 10% to 25%, with the mention that the first CRC 4,181 (USD 7,003) is exempt from taxation;
- salaries are also taxed at rates of 10% to 25%, where income of up to CRC 941 (USD 1,576) is exempt from imposition.
Apart from these, payroll taxes must also be considered. They apply as follows:
- 26.3% is deducted from employees’ salaries;
- 10.34% will be paid by the employer.
Should you need assistance filing tax returns, our specialists are at your service with support in such matters related to accounting in Costa Rica.
Rely on our trusted accountants in Costa Rica
Our local accountants are at the service of people and companies needing customized accounting services in Costa Rica. Our specialists are accredited by the National Institute of Certified Public Accountants which is a member of the International Federation of Accountants (IFAC).
We can provide you with services related to most accounting regulations in Costa Rica, including audit solutions which are mandatory for companies in this country.
Feel free to contact us for details about our accounting and company formation and citizenship services in Costa Rica.