Large companies in Costa Rica produce millions in income, pay no taxes

SAN JOSE, COSTA RICA – September 20th, 2012 – While the Costa Rican government may be suffering from a budget deficit, some 80 large companies in Costa Rica have combined income that is equivalent to half of the national budget – and don’t pay a cent in income taxes.

There are some 80 large companies that do not pay anything in taxes, even though their gross incomes all exceed $4 million dollars. One such company reported gross income of more than $1.2 billion dollars, another had a gross income of more than $410 million, three more, $200 million; and 8 others have a gross income of $100 million dollars or more.

With the government suffering from a budget deficit, why are some of the largest companies in the country not paying anything in tax?

Apparently they are claiming their expenses are just as astronomical as their incomes. For example, one of these companies reported a gross income of $58 million – and expenses totaling exactly the same amount.

Adrian Torrealba, a tax expert, said, “The fact that these big companies are claiming such losses is (suspect).”

Carlos Vargas, director of Tributacion, the government agency in charge of tax collection, said that 49 of these companies are currently being investigated.

The treasury inspector’s office said they suspect that if the country’s largest companies are able to avoid paying taxes, the situation with smaller companies may be even worse.

“There are (those) that unfortunately abuse certain failures in the system,” said Francisco Villalobos, ex-director of the tax department.

Allan Saborio, another tax expert, said the current tax legislation “is completely obsolete.”