More

    “Worldwide Income Tax” Would Turn Costa Rica Into a Development Hub in Central America in the Medium and Long term

    Must Read

    Despite Holidays, COVID-19 Contagion Rate Maintains a Downward Trend in Costa Rica

    For 3 weeks, the contagion rate in the country began to decrease....

    Cruise ships Could Return to Costa Rican Ports in a Matter of Weeks

    After several months of pause, the cruise ships could return to Costa...

    The Atlantic Trench, a Serious Nuclear Pollution Problem

    Much is said about environmental pollution that includes everything that alters our environment, but little is made of reference to the pollution suffered by the waters in our oceans
    TCRN STAFFhttps://www.TheCostaRicaNews.com
    Creating a Conscious alternative news network that we feel the world needs. Pura Vida!

    The discussion about Costa Rica implementing the Worldwide Income Tax (Renta Mundial) mechanism for the collection of Income Tax is gaining strength again in the country; this after the announcement of a bill proposed by the deputy of the Citizen Action Party (PAC), Welmer Ramos.

    According to Carlos Vargas Alencastre, CEO of TPC Group, a firm specialized in Transfer Pricing, if it occurs, this is an initiative that can bring benefits to Costa Rica in the medium and long term.

    “Costa Rica should be incorporated into the principle of Worldwide Income, not only because with this it would be integrated into an economic management scheme to which most of the world’s economies are joining, but also because it would also encourage the signing of a greater number of Agreements for Avoiding Double Taxation (CDI) with other countries in the region and the world. This would make Costa Rica more attractive to Foreign Direct Investment (FDI),” said Vargas Alencastre.

    Currently, the Costa Rican Tax System uses the Territorial Income, which taxes the income of taxpayers generated only within our country. With Worldwide Income, a person residing in country “A” must pay income tax on all his income obtained not only in country “A”, but also those generated in countries “B” and “C”.

    Precisely, this point has been misinterpreted in the discussion that has occurred in recent days and it has been said that all taxpayers will have to pay more taxes. However, this is not so.

    “In the case of companies, they will continue to pay for their profits generated in Costa Rica exactly as they do today with Territorial Income, since these companies are regulated by Transfer Prices, they would not undergo any change.
    The modification would only apply to individuals who generate income outside of Costa Rica, since they must declare their earnings generated both in Costa Rica and abroad, which is not done today,” explained Vargas Alencastre.

    Precisely, the principle of Worldwide Income taxation, establishes that it is the nation tax authority to calculate the existence of a link between the taxpayer and the State; In other words, all the taxpayer’s income generated in the country of residence and abroad would be subject to this tax.

    Regulation of Double Taxation and tax credits for individuals
    For Vargas Alencastre, the bill that promotes the use of Worldwide Income in Costa Rica should contemplate two very important aspects: 1) mechanisms to avoid double taxation, and 2) regulate tax credits for individuals with income in different countries. .

    In this sense, although the criterion of taxing worldwide income could cause double taxation, the payment that could be made in a country other than the country of residence is considered as a credit, the purpose of which is to alleviate, as far as possible, the international double taxation that would affect the subjects domiciled in the country.

    “Precisely for this reason it is essential that clear mechanisms be contemplated within the legislation; that is, to promote the signing of new Agreements to Avoid Double Taxation (CDI), to alleviate a possible international double taxation, and regulate tax credits”, explained the CEO of TPC Group.

    An example of this type of agreement is the Convention on Mutual Administrative Assistance in Tax Matters (CAAMMT), which allows the exchange of financial and tax information with 108 countries, and to which Costa Rica is already a party.

    “It is not a question of Costa Rica being in one regime or another, but in the amount of CDI that it must reach, since Costa Rica only has 3 signed at present; while countries like Mexico have 37, Chile 28, and Colombia 15. These countries are in the OECD and have had a stable growth in their economy in the last 10 years. Consequently, it would not only help Costa Rica to enter the World Income regime, but to obtain the highest ranking, getting as much CDI as possible. This would also attract more FDI to the country,” stated Vargas Alencastre.

    He added that in recent years, Costa Rica has made considerable progress at the tax level, but it still needs precisely to advance towards Worldwide Income tax and from there sign a greater number of CDIs. By achieving these two points, Costa Rica would become a development hub in Central America.

    “More and more countries are joining the World Income regime, and as the saying goes, it is better late than never, so this legislative initiative should be taken as a unique opportunity for Costa Rica to continue advancing inconsistent tax policies to the current times”, concluded Vargas Alencastre.

    Relocate to beach work remote
    Resonance has been created to bring together a community of digital nomads, entrepreneurs, innovators, wisdom keepers, alternative thinkers, mentors and light leaders from all over the planet to bridge the gap between demanding work and living a lifestyle that offers the opportunity to live and work in an environment that is nourishing and supportive.
    - Advertisement -

    LEAVE A REPLY

    Please enter your comment!
    Please enter your name here

    - Advertisement -

    Latest News

    Despite Holidays, COVID-19 Contagion Rate Maintains a Downward Trend in Costa Rica

    For 3 weeks, the contagion rate in the country began to decrease....

    Cruise ships Could Return to Costa Rican Ports in a Matter of Weeks

    After several months of pause, the cruise ships could return to Costa Rican ports in a matter...

    The Atlantic Trench, a Serious Nuclear Pollution Problem

    Much is said about environmental pollution that includes everything that alters our environment, but little is made of reference to the pollution suffered by the waters in our oceans

    Server update causes errors in digital signature and bank pages in the country

    A computer incident derived from a regular update of servers causes errors in the resolution of the...

    The way in which 100 years ago back to school was encouraged in the midst of a terrible Pandemic

    Faced with the threat of a potentially fatal airborne disease and even without the development of a vaccine, how to ensure the safe return of children to class?
    - Advertisement -

    More Articles Like This

    - Advertisement -
    Language »