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Costa Rica Having Difficulty Implementing Tax Collection System

Article Summary:

The National Registry of Costa Rica is experiencing many difficulties in implementing the collection of tax on corporations because it lacks allocated funds to proceed, and the registry of MSMEs at the Ministry of Economy, Industry and Commerce (MEIC) is not very helpful because of its own shortcomings.

Photo Credit: El Financiero

Original Article Text From El Financiero via Google Translate :

Confusion in tribute to companies

While lacking the National Register of budgeted resources to cope with the costs of collection, the list of commercial companies of the Treasury, and the record kept by the Ministry of Economy, Industry and Commerce (MEIC) of micro, small and medium enterprises, not help much to debug the collection, which got into trouble in the National Register.

In a tone of frustration, the director of that institution, Dagoberto Sibaja said that only the first experience with the corporate tax was clearly needed reforms to the law to specify details.Uncertainty before and afterSibaja was clear. The wording of the “Law of corporation tax” leaves many gaps that impeded the effectiveness suitable in its collection.”

They had to make numerous decisions, always with the sense not to prejudice as far as possible to run, because the law is unclear on concepts such as what are active and which inactive companies. That we complicated the collection process, “said the chief.

Another aspect of concern to the director of the National Register is the definition of tax administration as provided by law and which he said could worsen the recovery in future periods.” Because of the ambiguity of the legislation, Tax Office states that the registry is the tax administrator in this case. We believe that it is they who should be set up as tax administration, because the function is merely our registry, “he argued.

EF tried to find the position of the Ministry of Finance on the issue identified by Dagoberto Sibaja. However, it was reported that only the Ministry of Justice and Peace would relate to corporation tax, as the National Register a unit of the ministry.

Top marks for the future
Of the 571,000 companies registered on the National Register, less than a quarter had paid the tax, the court that made the institution last Thursday.

According Sibaja, the ineffectiveness of the collection of the tax was due to many factors but mainly to the ineffectiveness resulting from crosses between the databases of Finance, which keeps track of which companies engaged in trade, and MEIC database where SMEs that are registered by their character of small business, are exempt from the tax of ¢ 180,000 per year.”

Many taxpayers claimed because they are being included in a category when the society really is inactive and, therefore pay less. Stuff like that forced us to work energetically. Clearer record deal, to help us to elucidate the definitions that fit each of the companies, “said Sibaja.

Another aspect that remains in the air is the real expectation of revenue that can generate the tax .In his view, this would only be known with certainty until three years when desinscriban all companies that do not pay tax in that period, as required by law that took effect last year.

Another difficult time
But the worst has not been overcome yet. Sibaja said that from now when the deadline for paying the tax, the National Register provides massive paperwork representatives of companies that will employ mechanisms willing to pay less taxes during the next billing period.”

Many of these companies are dissolving, others are being liquidated and others are merging. The law allows 30 days after payment of tax for those movements, “he said.

To the processes established by law, the chief of the National Registry believes that urgent work out the details that are unclear legislation, through a partial reform.

However, knowing the legislative bureaucracy, Sibaja said that changes at least should be included in the regulations that are currently in draft stage. In any case, the provisions should be ready by 1 January 2013, when there is the event for the tax.

“The companies at that time consider active or inactive, such as micro and small enterprises, and pay, so we need clear concepts as soon as possible”, he said.

Commission Just
Something that could be key to improving the future collection of corporate tax is the percentage of commission to be paid to the National Register.

His manager believes that the institution should receive 5% of intact total amount raised to cover costs generated by the collection of the tax.

For now, the Register must conform to share that percentage with the Directorate of Social Rehabilitation, forced to allocate resources to improve the prison system.”

We are merely an institution registration, but we raised some taxes, only we draw on the resources generated by the timbre of the National Register,” he argued.Sibaja said that if Parliament adopts the draft “Law for the efficient management of public finances”, which guarantees the payment of public services provided by some institutions, the Register would be prepared to cope with the costs involves the collection of corporate tax.

Moreover, despite all the complaints, the tax generated until last Thursday a total of ¢ 13.136 million.Of that total, 95% will go to feed the public safety plans promoted by the Executive.

However, the figure is far from what the Ministry of Public Safety considers necessary to cover all the needs for equipment and funding of the security forces.

Urgent changes
The National Registry recommends these amendments to the Act:
1 Type of company: It should be clarified when one considers that a society is active, inactive, or when a small business.

2 Commission: The Registry recommends that 5% of the proceeds earmarked to pay a fee for their collection services.

3 Tax Administration: It is urgent that the law clearly defines what is the state agency administering the tax.

4 Best records: Finance and the MEIC must clean up their databases to contribute to a better and faster collection of the tax.

5 Definitions should clarify the status of those societies that have no commercial function and only have properties inscribed.

Source Address of the National Register.

Penalties for late Holders of companies exposed to various punishments for default:
1 Certifications: The National Registry does not draw up any legal certification of the delinquent companies.

2 Registration: The law provides that the entity will not perform any legal registration to those who do not cancel.

3 Procurement: The defaulters will be barred from participating in contests to sell goods and services to the State.

4 Unsubscribe: If a company fails to pay the tax for three consecutive terms, will desinscrita registry.5Interests: Those who do not pay legal persons, are set to pay default interest at a rate of 13.30% per annum.

Link to Original Article:

From El Financiero

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