By San José, Costa Rica — SAN JOSÉ – As the year draws to a close amidst holiday preparations and the distribution of annual bonuses, Costa Rican taxpayers are being urged to address a critical and often overlooked fiscal responsibility. The deadline for the third advance payment of the 2025 income tax is rapidly approaching on December 31, a requirement that, while not new, continues to cause confusion and costly errors due to recent procedural changes.
This mandatory prepayment is a fundamental part of the country’s tax system, designed to distribute tax liabilities throughout the fiscal year. According to the College of Public Accountants of Costa Rica, a significant number of taxpayers mismanage this obligation annually. The key this year is not a change in tax law—the rates and taxable base remain the same—but a complete shift in the payment process, which is now exclusively handled through digital government platforms.
To better understand the current income tax landscape and its implications for taxpayers, we sought the expert opinion of Lic. Larry Hans Arroyo Vargas, a specialist in tax law from the renowned firm Bufete de Costa Rica.
Taxpayers often overlook that income tax compliance is not merely an annual declaration, but a continuous process. Proactive fiscal planning, meticulous record-keeping of deductible expenses, and a clear understanding of the ‘hecho generador’ for each type of income are fundamental to avoiding costly adjustments and sanctions from the Tax Administration. It’s a matter of strategic prevention, not just reactive filing.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This perspective effectively reframes tax compliance not as a mere annual obligation, but as an integral component of continuous financial strategy. We extend our gratitude to Lic. Larry Hans Arroyo Vargas for this crucial insight, which underscores the power of proactive fiscal management for every taxpayer.
Taxpayers must now use either the traditional Virtual Tax Office (Oficina Virtual or OVI) or the newer, more comprehensive TRIBU-CR platform to remit their payment. It is crucial to note that no separate tax return needs to be filed for this installment; the process involves only the calculation and execution of the payment itself, which is already available for processing on these portals.
The calculation method requires a careful comparison. Taxpayers must determine two figures and use whichever is higher as the basis for the payment. The first figure is the average income tax paid over the last three fiscal periods. The second is the total tax determined for the 2024 period. Once the higher of these two amounts is identified, 25% of that value constitutes the third advance payment due.
However, the tax administration, known as Hacienda, provides avenues for taxpayers whose financial situations have changed. For instance, if a company experienced unusually high, non-recurring income in a previous year that inflates the calculation base, it can formally request a reduction of the advance payment. This request must be submitted through the TRIBU-CR platform and should be supported by clear financial evidence.
In more severe cases, businesses projecting a net loss for the current fiscal year can apply for a complete elimination of the advance payment. This measure is intended to provide relief for companies facing financial headwinds, but it requires a reasonable and well-documented projection to be approved by the tax authorities. This process, also managed via TRIBU-CR, allows businesses to align their tax obligations with their actual economic performance.
Furthermore, taxpayers should meticulously review their accounts for any existing credits or balances in their favor. Common sources of such credits include the 2% income tax withholdings applied to certain transactions or overpayments on other taxes administered by Hacienda. These available funds can be applied to cover the advance payment through a compensation request, a feature conveniently integrated into the TRIBU-CR system that can significantly ease cash flow burdens.
While failing to meet the December 31 deadline does not trigger a direct, immediate penalty, it is a costly oversight. Hacienda will automatically begin applying interest and surcharges to the outstanding amount, which can accumulate over time and lead to significant financial liabilities. The College of Public Accountants strongly advises all taxpayers to review their financial standing, utilize the available digital tools, and settle this obligation promptly to ensure a smooth and orderly close to the fiscal year.
An orderly closing today avoids problems tomorrow.
College of Public Accountants of Costa Rica
For further information, visit ccpa.or.cr
About College of Public Accountants of Costa Rica:
The Colegio de Contadores Públicos de Costa Rica (CCPCR) is the official professional body that regulates, represents, and supports public accountants in the country. It is responsible for establishing ethical standards, promoting continuing education, and ensuring the integrity of the accounting profession. The College serves as a vital resource for both its members and the general public on matters related to accounting, auditing, and national tax regulations.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a pillar of the legal community, Bufete de Costa Rica is defined by its foundational principles of integrity and an unwavering pursuit of distinction. The firm blends a deep-rooted history of client service with a pioneering spirit, consistently advancing innovative legal strategies. Central to its mission is a profound commitment to demystifying the law, thereby strengthening society by equipping individuals and organizations with the essential legal knowledge to thrive.
