Costa Rica enacts law making reforms to achieve exclusion from EU's list of non-cooperative jurisdictions in tax matters

• The law came into force on 02 October 2023, following its publication in the Official Gazette.
  
  
• The Executive Branch has three months to issue the relevant regulations.
  
  
• It is important to closely monitor the review that the European Union will carry out in October 2023, when it will decide whether, following the approved reforms, Costa Rica will be removed from Annex I of the list of non-cooperative jurisdictions for tax purposes.
  
   

On 02 October 2023, Law No. 10.381, which aims to incorporate amendments to the Income Tax Law necessary to achieve Costa Rica's removal from the European Union's (EU's) list of non-cooperative jurisdictions in tax matters, was published in the Official Gazette.

Background

On 26 September 2023, the Costa Rican Congress, with 38 votes in favor, overturned the partial veto announced by the President of the Republic of Legislative Decree No. 10.381 (Bill No. 23.581), which aims to incorporate amendments to the Income Tax Law necessary to achieve Costa Rica's removal from the European Union's (EU's) list of non-cooperative jurisdictions in tax matters.

For background on the President's partial veto, see EY Global Tax Alert, Costa Rican President partially vetoes law aimed at making reforms to achieve exclusion from EU list of non-cooperative jurisdictions in tax matters, dated 20 September 2023.

Next steps

The law came into force on 02 October 2023, following its publication in the Official Gazette. The Executive Branch has three months in which to issue the relevant regulations.

Furthermore, the European Union will conduct its next review of Annex I of the list of non-cooperative jurisdictions for tax purposes in October 2023 and determine whether, after the approved reforms are made, Costa Rica will be excluded from the EU's list of non-cooperative jurisdictions in tax matters.

For more information on the amendments to the Income Tax Law, refer to EY Global Tax Alert, Costa Rican Congress approves bill to achieve exclusion from the European Union's list of non-cooperative jurisdictions in tax matters, dated 12 September 2023.

For additional information with respect to this Alert, please contact the following:

Ernst & Young, Costa Rica

• Rafael Sayagues
  
  
• Randall Oquendo
  
  
• Daniel Quesada

Published by NTD's Tax Technical Knowledge Services group; Carolyn Wright, legal editor

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.