Major Tax Reform in Costa Rica

    Jan 29, 2020 @ 06:05 AM / by Jeremy Piccoli

    Costa RicaSunset in Escazu, Costa Rica. Photo taken by AIRINC Surveyor Samuel Pearl Schwartz.

    Costa Rica is changing the tax year

    As of October 1, 2019, Costa Rica is implementing major tax reform. This began on July 1, 2019 and the changes implemented then included increased progressive tax rates on employment income, with the top marginal tax rate increasing from 15% to 25%. Costa Rica is changing the tax year, switching from a tax year beginning October 1st to a tax year beginning January 1st.

    There will be a 15-month transition period beginning October 1, 2019 through December 31, 2020. The next tax period will begin January 1, 2021. The changes implemented October 1st are inflation-indexing of the tax brackets and the personal tax credits. The net effect of the changes compared to July 1st is a small decrease in income tax for middle and higher incomes. Social security contributions are unchanged.

     


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    Topics: International Tax, Data Points, Insights and Experience, Tax, Costa Rica

    Jeremy Piccoli

    Written by Jeremy Piccoli

    Jeremy joined AIRINC in the fall of 2012 and is responsible for managing AIRINC’s International Tax Guide and tax calculator products, as well as consulting with clients. Prior to joining AIRINC, Jeremy spent more than 6 years with PricewaterhouseCoopers’ International Assignment Services practices in Hartford and Boston, providing tax compliance and consulting services to multinational companies and their expatriate population. He received his B.S. with a concentration in Accounting and a Master of Science in Accounting from the University of Connecticut. Jeremy is an Enrolled Agent, a federally licensed tax practitioner who specializes in taxation.