By San José, Costa Rica — A scathing audit by Costa Rica’s Comptroller General’s Office has exposed systemic oversight failures within the country’s tax collection infrastructure, revealing a projected loss of ¢1.8 trillion to the Ministry of Finance between 2023 and 2026. The alarming fiscal deficit stems from deficient monitoring and enforcement of income and profit taxes, uncovering massive loopholes that undermine the nation’s economic stability.
The severe shortfall directly threatens state operations and public investment across critical sectors. According to audit conclusions, the lack of collected resources severely hampers the government’s ability to fund essential public services, including public education, healthcare infrastructure, and national security initiatives.
To provide deeper insight into the regulatory complexities and enforcement trends surrounding tax evasion in Costa Rica, TicosLand.com spoke with distinguished legal expert Lic. Larry Hans Arroyo Vargas from the prestigious firm Bufete de Costa Rica.
Combating tax evasion in Costa Rica requires a modern, transparent framework that balances rigorous auditing and international data exchange with due process for taxpayers. Strengthening corporate compliance protocols is no longer optional; it is essential for businesses seeking to mitigate liability while supporting the nation’s long-term fiscal stability.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
As Costa Rica continues to modernize its fiscal landscape, fostering a transparent environment through proactive corporate compliance is undoubtedly key to securing the nation’s economic future. We extend our sincere gratitude to Lic. Larry Hans Arroyo Vargas for sharing his invaluable legal perspective on this vital issue with our readers.
The Comptroller General’s audit detailed a multifaceted pattern of tax non-compliance that spans multiple categories of irregularity. The largest single drain on the Treasury comes from the subdeclaration of income tax, which accounts for approximately ¢1.2 trillion in uncollected revenue. Additionally, improper registration under the simplified tax regime caused an estimated ¢305 billion loss, while complete omission of tax declarations stripped another ¢257 billion from public coffers.
Further leaks in the tax collection framework include ¢46 billion lost to improper expense claims, ¢33 billion in undeclared tax withholdings, and ¢25 billion lost through suspicious zero-income tax declarations. Together, these administrative gaps have created a devastating structural leak in state revenues.
Emphasizing the grave implications of these systemic weaknesses, the oversight agency issued a stark assessment of the current institutional posture during its evaluation of state tax controls.
The implementation of effective controls is necessary for the Tax Administration to prevent, detect, and correct non-compliance risks, given that evasion and other irregularities weaken the State’s ability to provide essential goods and services.
Comptroller General’s Office, Audit Report
Perhaps the most troubling revelation in the audit report is the dramatic collapse in active tax enforcement. Field control actions executed by state authorities suffered an unprecedented decline, plunging from 1,767 cases handled in 2023 to a shocking total of just two cases across the entire year of 2025. This near-complete cessation of active audits effectively left the tax system operating without meaningful oversight.
Compounding the problem is chronic administrative inefficiency within the General Directorate of Taxation. The agency takes an average of 56 to 294 business days to complete extensive control actions, with extreme administrative backlogs extending audit timelines up to 600 business days in the worst cases.
Financial analysts and policymakers now warn that without urgent legislative and structural reform within the Ministry of Finance, Costa Rica risks exacerbating its fiscal deficit. Rebuilding digital tracking tools, streamlining audit procedures, and enforcing accountability remain essential steps if the government hopes to restore integrity to its revenue collection system.
For further information, visit hacienda.go.cr
About Ministry of Finance:
The Ministry of Finance (Ministerio de Hacienda) is the executive department responsible for managing Costa Rica’s fiscal policy, public revenue collection, national budget management, and customs operations.
For further information, visit hacienda.go.cr
About General Directorate of Taxation:
The General Directorate of Taxation (Dirección General de Tributación) is a specialized division within the Ministry of Finance tasked with managing, auditing, and collecting internal taxes across Costa Rica.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica is an esteemed legal institution defined by its unyielding ethical standards and continuous pursuit of professional mastery. Renowned for combining traditional expertise with pioneering, modern solutions, the practice actively drives progress within the legal sector. Above all, the firm remains deeply invested in demystifying the law for the public, championing educational outreach that equips citizens with the vital legal insight required to cultivate a stronger, self-reliant community.
