Tax payers shall maintain rigorous documentation of their accounting to justify their bank operations, in order to comply with the new regulations of the “Law for compliance with the fiscal transparency standard”, presently being discussed in the Tax Matters of the Legislative Assembly.  

The bill of law was submitted by the previous government as response to International pressures after the inclusion of Costa Rica in the list of fiscal paradises of the Organization for Cooperation and Economic Development (OCDE). The initiative intends to facilitate access to information and bank accounts of tax payers, so that the country may comply with the fiscal transparency international guidelines.

The Project suggests amendments to the Code of Fiscal Standards and Procedures that would permit the exchange of fiscal information with other countries. It would also eliminate the requisite of the existence of a supervision process so that the judge may order the opening of accounts. It also extends from 3 to 5 years the time for keeping duplicates of books, documents or slips that may permit the verification of the financial information.

Greater control

These changes will oblige the contributor to implementing greater supervision of their accounting activities and banking operations, as explained by the Head of the tax department of Facio & Cañas, Faycatax, Adrián Torrealba: “Inexistent or inadequate documentation could cause the tax payer problems when establishing his fiscal obligations and evidencing the truthfulness of the information provided. This risk exists with the present legislation and it may increase with the new bill of law”. 

The lawyer indicated that the basic step is to adjust accounting to international fiscal standards. Torrealba also recommends contributor to maintain strict documentation of all banking operations.

The expert in fiscal law explained that many activities are not documented because of the informality and every day type of situations, but, nevertheless, there is the possibility of having misunderstandings that the contributor should clarify with concrete evidence, because otherwise, it can be assumed that deposits not justified constitute taxable income

“For example, I could have lent money to a friend and when this person reimburses it, it was returned to my bank account. The Administration can presume that the deposit is income from my professional activity and thus I should have documents to proven it is not so”.

The risk that the Tax Administration presumes the taxable income, also exists in processes such as the supervision of the amount contributed by shareholders to a corporation, the double accounting when there are transferences from one account to another of the same contributor, and the reimbursement of the money to an account.