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COSTA RICA |
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The
Highly Questionable, Possibly Illegal,
Possibly Unconstitutional Costa Rica Luxury
Tax
Open letter by: Bob Klenz, Dominical, Costa
Rica.
vistadelcano@hotmail.com
I have lived for over 16 years full time in
Costa Rica with 15 years of permanent
residency. I understand how things work here
and also how things don’t work here. Laws
are written by politicians with good intent
but with very little understanding of how
difficult or impossible it is to comply with
them.
Most laws passed in Costa Rica are
eventually challenged in the Supreme Court
and ruled unconstitutional. I would hope
that this will happen in this case. The end
result should be a better and fairer law and
a means of helping the poor and the housing
problems.
To start off with, I am not against the
intent of this law, i.e. to help eliminate
slums within Costa Rica. That being said, I
am against a truly ridiculous method of
trying to collect this tax using
intimidation and threats against common
everyday citizens and residents. I can’t
believe that to date, nobody has challenged
this questionable law and that there aren’t
more people (especially Tico’s) in an
uproar, screaming bloody murder over this
misuse of power. We have large groups of
friends in both Dominical and in San Jose.
These friends are from all over the world
and many are Ticos.
At every gathering the only topic of
conversation is this problem tax and the
inability of all of us to figure out how to
comply with it. Many people are very upset
with it and even though they may want to
comply, do not know how or cannot do so
legally. The high degree of frustration is
evident with everyone we speak to about this
tax. The Costa Rican Government should only
know the amount of pain they have caused so
many people who want to do their part but
can’t. As to the problems of this tax.
Even a blind person can see the inequities
that are so blaring in this law:
1) Pay on line via computer! Although in
this day and age, many people are computer
literate, I find it highly questionable as
to the legality of requiring people to own
or use a computer to file a hard to
understand tax form. Is it part of the Costa
Rica Constitution to own a computer?
2) As a foreign resident, WITH OR WITHOUT A
RESIDENT CEDULA, you cannot access the
DIRECT TRIBU NET site. The only access can
be by a Costa Rican using their cedula and
its expiration date. Try it and if you can
get online, please correct me and explain
how you did it. In my years of experience
with laws in general, I find it quite
difficult to believe that you can be found
guilty of not filing when you cannot access
the site to do so. The Ministry of Hacienda
knows about this problem but refuses to
rectify it.
3) The law requires a person to submit to
Tributacion, a Costa Rica Bank Account
number with which the Government can
automatically withdraw this tax from. I
don’t know how many of you out there trust
the Costa Rica Government, or any
Government, with the ability to freely
withdraw funds from your bank account. If
you do, you may want to seek some
psychiatric help! It should be up to the
Government to give you their account to
deposit funds to, not the way it is
unconstitutionally proposed.
4) Many people are talking about hiring an
Attorney, an Appraiser or a Title Company to
assist them in this process. The law should
not and does not require you to do this but
suggests it and most people feel compelled
to do so because they just don’t understand
what to do. Most of the firms advertising
their services do not understand the law and
how to complete the forms. They are just
looking for business, a business that will
help them out for the next 10 years or more.
I have seen several letters from various
firms that show, by their own description of
services, that they will most likely do a
very poor job for you and should not be
hired. When a law is so complicated that it
almost forces people to spend between $400
and $1000 just to complete an appraisal and
a form, this leads me to think the law is
unconstitutional once again.
5) The initial tax and filing of forms is
due on Dec. 31, 2009 with a 2nd tax due on
January 15th. For those of you who live in
Costa Rica, you understand what happens on
holiday periods such as Christmas and
Easter. In the case of Christmas this year,
the Government offices will shut down on
December 18th and reopen on January 4th
2010. When the Government shuts down, so do
most Attorneys’, Accountant’s and
Appraiser’s. So, in reality you don’t have
until Dec. 31st to complete your filing, you
have until Dec. 18th which by the way is a
little over 1 week away. Also, once the
Government offices reopen on the 4th, they
will need at least one week to get up to
speed and back to work again, especially on
a reduced work force as usually is the case
after long holiday periods. Once again, GOOD
LUCK!!!!!
6) Are you an Appraiser? Have you gone
through your years of schooling to be one?
Do you understand how to measure your
structures, the walls of your house, your
outbuildings, fences, driveways and swimming
pools? Can you determine the value of your
land, determine slopes and grades? If you
are very good at all of this you should have
fewer problems than most people in
completing this process. I have been
involved in the real estate business for
well over 30 years and I am having problems
completing these forms. Once again, good
luck to all of you that have the
overwhelming experience you will need for
this process.
7) Fines of 5 and 10 times the unpaid tax!
How stupid is this! When penalties are
usurious and unreasonable, they cannot be
legal. Do you really believe they have the
power to fine you 5 times the unpaid tax if
you underestimate your property value by
10%? They can say this but enforcing it will
be almost impossible. Again, are you an
appraiser? Are you a computer expert? Can
you comply with this law in the short time
span given? The Government itself doesn’t
even know how to collect taxes efficiently
but they want to charge you a high penalty
for you not being in compliance. How about
the foreigner property owners who live out
of the country and can’t
comply for many of the above reasons. Are
you going to tell me that they must pay a
penalty of 10 times the unpaid tax? This is
so ridiculous it is hard to believe.
8) What does the Government think this type
of law is going to do to foreign investment?
How many foreigners are going to invest
knowing that they will have at least 10
years of double taxation? How many hotel and
cabina owners will not be able to pay these
excessive taxes due to lack of business and
tourism? With this type of law, it will be
difficult to sell any upper end condos,
apartments or homes. Is this really what the
Government is looking for?
In closing, I would suggest that the Costa
Rica Government revisit this law and make it
something that can be used simply by all
taxpayers and or homeowners. Perhaps a
simple flat tax on all Corporations or some
other method could be a friendlier way of
implementing this. The end result and the
amount of money obtained could be the same
or possibly better. I know and truly believe
the Costa Rican Government will wake up to
the fact that they passed a bad law and in
the end will revise it to make it legal,
constitutional and in the best interests of
the people. |
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