Costa Rica’s Tax Authority establishes new criteria for use of information contained in Transparency and Beneficial Owne

The resolution published by the Costa Rican Tax Authority establishes new criteria for the use of information contained in the Transparency and Beneficial Ownership Register for tax risk management. These new provisions are in force as of 1 January 2023.

Background

According to article 9, subparagraph a) section 2, of the Law to Improve the Fight Against Tax Fraud, Law N° 9416, the Tax Authority is empowered to access and use the information contained in the Transparency and Beneficial Ownership Register, managed by the Costa Rican Central Bank, for the preparation of tax risk management plans. Access and use of information for these purposes will be determined based on previously defined criteria. These criteria are relevant to evaluate and diagnose the risk of irregular behaviors of a group of taxpayers, that can lead to a presumption of tax fraud or tax breaches.

New criteria for the use of information contained in the Transparency and Beneficial Ownership Register

On 12 January 2023, the Tax Authority published the resolution N° DGT-R-46-2022, which establishes the criteria for the use of the information contained in the Transparency and Beneficial Ownership Register, for the elaboration of tax risk management plans of the Tax Authority for year 2023.

The list of criteria defined in the Resolution includes cases such as:

• Non-submission of the Transparency and Beneficial Ownership Register return

• When any legal person reported in the Register as a shareholder has assets that show alleged cases of assets growth or high net worth

• When a foreign company with a national legal identification number (identifier number 3-012) does not file the Transparency and Beneficial Ownership Register return but is up to date with the payment of the tax on legal entities

• When any of the shareholders of a legal entity is domiciled in a non-cooperative jurisdiction or in a jurisdiction with a lack of tax and financial transparency

• When a legal person does not determine any ultimate beneficiary by substantive participation (holding shares that represent 15% or more of the total share capital) but must be determined by means of substantive influence (have control by other means over a legal person: most shareholder’s voting rights, right to appoint or remove most governing bodies of administration, management, or supervision of the legal person, etc.)

• When an interposed legal person with substantive participation is domiciled in a non-cooperative jurisdiction or in a jurisdiction with a lack of tax and financial transparency and whose ultimate beneficiary is a Costa Rican national or a Costa Rican foreign resident

• When a natural person has participation in 50 or more legal persons.

• When in more than one legal person there is a participation of a natural person who, accumulating his participations through several interposed legal persons, manages to achieve a substantive participation.

The Resolution came into force as of 1 January 2023. The complete list of the criteria defined by the Tax Authority can be consulted in the following link (pdf) (only available in Spanish).

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

Ernst & Young, S.A., San José, Costa Rica

• Rafael Sayagués

• Randall Oquendo

• Daniel Quesada

Ernst & Young LLP (United States), Latin American Business Center, New York

• Lucas Moreno

• Ana Mingramm

• Pablo Wejcman

• Enrique Perez Grovas

Ernst & Young LLP (United Kingdom), Latin American Business Center, London

• Lourdes Libreros

Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific

• Raul Moreno, Tokyo

• Luis Coronado, Singapore

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