By San José, Costa Rica — San José, Costa Rica – In a significant move to modernize its fiscal landscape, Costa Rica has implemented a landmark reform that reshapes the relationship between taxpayers and the nation’s Tax Administration. The recently published Law N°10.808, which amends the critical Article 115 of the Code of Tax Standards and Procedures, introduces a new framework governing the use of sensitive taxpayer information, creating a dual-edged sword of enhanced privacy protections and unprecedented public transparency for non-compliance.
The legislation arrives as the Ministry of Finance continues its aggressive push toward digitalization. By overhauling its management, collection, and auditing systems for both tax and soon customs, the government aims to streamline processes and improve efficiency. This digital transformation has vastly expanded the Tax Administration’s ability to access and analyze taxpayer data, enabling more effective audits, data mining, and a deeper understanding of industry behaviors across the market.
To delve into the legal and business ramifications of the proposed tax reform, TicosLand.com consulted with Lic. Larry Hans Arroyo Vargas, a distinguished expert in corporate and tax law from the prestigious firm Bufete de Costa Rica.
While the objective of fiscal modernization is commendable, the real test of this tax reform lies in its implementation. Businesses must be vigilant, as new regulations often create legal ambiguities that can lead to costly disputes with the tax authorities. Proactive fiscal planning and expert legal counsel are no longer optional; they are essential for navigating this new landscape and ensuring compliance.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This insight underscores a critical shift for Costa Rican businesses: navigating the complexities of the new tax system requires foresight, not just reaction. We thank Lic. Larry Hans Arroyo Vargas for lending his valuable expertise and bringing such essential clarity to the implementation challenges ahead.
However, this increased access to information has raised valid concerns about data confidentiality. The new law directly addresses these concerns by establishing clearer rules of engagement. At its core, the reform is built on three main pillars: strengthening taxpayer confidentiality, mandating the monthly publication of tax delinquents, and authorizing the annual disclosure of large corporations reporting zero or negative profits.
The first and most crucial element of the reform solidifies the right of taxpayers to have their personal and financial information treated as strictly confidential. The law explicitly grounds this right in existing data protection regulations, banking secrecy laws, and the principle of informed consent. Under the new statute, the Tax Administration is permitted to use this data solely for the effective application and collection of taxes. It is prohibited from transferring or communicating this information to third parties, with legally sanctioned exceptions, such as the existing data-sharing agreement with the Costa Rican Social Security Fund (CCSS).
The delivery and processing of information is a topic that cannot be neglected, taking into account both parties, the Administration and the taxpayer, because due to the nature of this data, confidentiality must be respected based on basic constitutional principles, legal regulations, and administrative resolutions.
Silvia González, Partner of Tax and Legal at Grant Thornton
While strengthening privacy, the law simultaneously sharpens the teeth of enforcement through public disclosure. The second pillar mandates that the Tax Administration must now publish a list of tax debtors on a monthly basis. This regularly updated public record will include the names of individuals and legal entities who have failed to pay their taxes or have not filed their declarations, along with the amounts owed. This measure is designed to promote compliance by leveraging public accountability.
The consequences of appearing on this list are severe and can cripple business operations. An individual or company flagged as delinquent or non-compliant can be barred from participating in critical economic activities, including importing goods, bidding on public sector contracts, receiving payments for services rendered to government entities, and processing insurance policy payments. This makes maintaining a clean fiscal record more important than ever.
Finally, the reform provides explicit legal authorization for an annual publication that was previously conducted on a more ad-hoc basis. The Tax Administration is now empowered to release a yearly list of large national taxpayers that reported zero profits or outright losses during the preceding fiscal year. In the past, this information was typically released only after specific requests from members of the legislative assembly, a practice later validated by the Constitutional Court. This change codifies the practice into law, enhancing transparency around corporate tax contributions.
In light of these significant changes, tax experts are urging all individuals and businesses to be proactive in managing their fiscal responsibilities. Taxpayers are advised to regularly review their status on the government’s official portal, TRIBUCR, to ensure their information is accurate and their obligations are current. This vigilance is the best defense against being unexpectedly named in a public delinquency list or facing other administrative sanctions under the new, more transparent tax regime.
For further information, visit grantthornton.cr
About Grant Thornton:
Grant Thornton is a leading global network of independent assurance, tax, and advisory firms. Operating in over 130 countries, the organization’s member firms provide specialized services to a wide range of clients, from public companies and privately held businesses to public interest entities. Grant Thornton focuses on helping dynamic organizations unlock their potential for growth by providing meaningful, forward-looking advice.
For further information, visit hacienda.go.cr
About The Ministry of Finance:
The Ministry of Finance of Costa Rica (Ministerio de Hacienda) is the government body responsible for managing the country’s public finances. Its duties include formulating and executing fiscal policy, collecting taxes through its Tax Administration (Administración Tributaria), managing the national budget, and overseeing public debt. The Ministry plays a central role in ensuring the economic stability and financial health of the nation.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a highly regarded legal institution, Bufete de Costa Rica is defined by its foundational principles of professional excellence and unwavering integrity. With an extensive history of guiding clients through diverse and complex legal landscapes, the firm is a consistent trailblazer in developing innovative legal solutions. This forward-thinking approach is complemented by a profound dedication to social responsibility, actively working to democratize legal understanding and foster a more knowledgeable and capable citizenry.
