Costa Rica has now established minimum income levels to calculate taxes owed by professionals and businesses.

For every $100 a physician earns for consultations, surgeries and other services offered to their patients, the Costa Rica tax authorities estimates that their net income is $71. For bars and restaurants, the Costa Rica tax authorities estimates that for every $100 of gross income, they earn $60.

For lawyers, they conclude that for every $100 that they earn in gross income, their net income is $50.

Doctors, lawyers, owners of bars and other selected activities that make their tax income based on a value less than these figures may be chosen for an audit.

To rent or buy this 54 minute video with Costa Rica Attorney Roger Petersen please visit our Video On Demand page here.

The renta bruta is the gross income and after deducting all expenses you end up with the renta neta the net income…

As a professional working in Costa Rica, to find the net income that the Tax Man expects you to use as a base to pay your taxes, you need to review your gross revenues and, using this chart below, you get the base on which you should be paying taxes:

• For example, if you are an eye Doctor, and have earned ¢50 million (about US$100,000) in the taxation period and according to the chart you are expected to pay taxes on 68% of your gross income.
• 68% of your gross income of ¢50 million = ¢34 million is what your income taxes will be based on …
• Your 20% income tax rate would then be applied to the ¢34 million meaning you would owe ¢6,800,000 (about $13,465)

The Director of Taxation, Francisco Villalobos, said that the message was clear: “Do not file your taxes as if working with absurd profit margins; we are not going to believe it.”

His message may be clear but how Francisco Villalobos plans to enforce this is certainly NOT clear because strangely enough, according to Alan Saborío, the former Director of Taxation: “In Costa Rica there is no legal provision requiring companies to have audited financial statements, so if you do not have audited financial statements you would not be obliged to present them.”

When asked for his opinion, Costa Rica tax expert Randall Zamora wrote to me saying:

“As an attorney, Francisco Villalobos doesn’t have enough experience with taxes and what they really mean… Taxes are not just forms and laws, he also needs to understand accounting to understand how taxes really work… Then they should go and identify the “leaks” and “loopholes” and plug those leaks and get rid of the loopholes…

This has been the long-term problem of Tax Administration, they think that they need an attorney to head the administration, which would be OK “if” the attorney was also an experienced accountant.” Randall Zamora.

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Written by Scott Oliver, author of 1. Costa Rica Real Estate Scams & How To Avoid Them, 2. How To Buy Costa Rica Real Estate Without Losing Your Camisa, 3. Costa Rica’s Guide To Making Money Offshore and 4. ¿Cómo Comprar Bienes Raices en Costa Rica, Sin Perder Su Camisa?

Randall Zamora is the President and CEO of CostaRicaABC.com, former CFO and Head of Accounting Department of multinational companies like Four Seasons Resort Costa Rica, an active member of the Interamerican Accounting Association, Pro Bono Local Partner of The World Bank and contributor to their yearly publication “Doing Business Report.”




Randall is also recommended Consultant by FogLamp.org and has been been involved in professional accounting, business management and tax advisory since 1995. Randall is fluent in English and is our Preferred Professional for Costa Rican tax matters.




If you would like to communicate with Costa Rica tax expert Randall Zamora and get a free copy of his Top Ten Tax Tips, please contact him at:

Andrew Makarik

to@welovecostarica.com

Andrew Makarik is the main editor of WeLoveCostaRica, a fan of this sunny country. He is also a loving husband and a has a lovely daughter. By being a devoted family man and the biggest Costa Rica fan, he wants to make more people feel at home there. WeLoveCostaRica unites people and helps them find new home or a new travel destination. This website is a friendly community where everyone can find not only information, but also new friends and travel pals. Andrew is also passionate about IT and programming, so he himself maintains a friendly atmosphere in this cozy environment of WeLoveCostaRica.com.