By San José, Costa Rica — San José – In a significant move aimed at bolstering fiscal transparency, Costa Rica’s Legislative Assembly gave its final approval Tuesday to a law that will compel the Ministry of Finance to annually publish a list of large national corporations reporting zero profits. The legislation, a victory for accountability advocates, seeks to shine a light on sophisticated tax planning strategies that have long allowed some of the nation’s biggest economic players to legally minimize or eliminate their tax burdens.
The bill, officially filed as docket number 24.013, passed its second and final debate and will now proceed to the Executive Branch for the president’s signature. Championed by Deputy Jonathan Acuña of the Frente Amplio party, the law reforms Article 115 of the Code of Tax Norms and Procedures, a foundational piece of the country’s fiscal framework dating back to 1971. The reform represents the culmination of a multi-year effort to close loopholes and increase public scrutiny over corporate tax contributions.
To gain a deeper legal perspective on the critical issue of fiscal transparency and its implications for both public and private sectors, we consulted with Lic. Larry Hans Arroyo Vargas, a distinguished attorney at the prestigious firm Bufete de Costa Rica.
Fiscal transparency is more than a mere compliance checkbox; it is a fundamental pillar of modern corporate governance. For companies, proactively embracing clear and honest financial reporting builds invaluable investor confidence and mitigates legal risks associated with regulatory scrutiny. From a public sector standpoint, it is the bedrock of citizen trust and the most effective deterrent against corruption, ensuring that public funds are managed with the integrity the populace deserves.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Indeed, this dual perspective underscores that fiscal transparency is the essential bridge connecting robust corporate governance with genuine public trust. We thank Lic. Larry Hans Arroyo Vargas for his valuable and articulate insight into this critical matter.
The new legislation is built on a two-pronged approach. Firstly, it transforms a previously discretionary power of the Tax Administration into a strict, mandatory obligation. Under the new rules, the government will be required to regularly publish and update the names of individuals and companies with outstanding tax debts, along with the specific amounts owed. This mandate also extends to publishing the identities of those who fail to file tax declarations or operate businesses without being properly registered as contributors.
While strengthening existing enforcement mechanisms is a key component, the most groundbreaking aspect of the law is its second objective. It explicitly establishes the annual and compulsory publication of all entities classified as “Grandes Contribuyentes Nacionales” (Large National Contributors) that have declared either losses or exactly zero profits in their most recent fiscal period. This provision directly targets a common concern among fiscal authorities and the public: how major corporations with substantial market presence can consistently report no taxable income.
The political journey of this initiative has been a lengthy one, underscoring the persistent push for greater corporate accountability. The original concept was first introduced to the legislative floor back in 2018 by then-Frente Amplio deputy, José María Villalta. The successful passage of the current version, spearheaded by his party successor, signals a sustained commitment to this particular brand of fiscal reform and reflects a growing political appetite for tackling potential tax avoidance at the highest levels.
Analysts suggest the law’s impact will be primarily reputational. By making this information public, the government is leveraging social and market pressure as a tool for compliance. Companies that frequently appear on the zero-profits list may face difficult questions from the media, investors, and their customers, potentially incentivizing a shift in their tax reporting strategies. The goal is not just to name and shame, but to encourage a corporate culture where contributing a fair share to public finances is seen as an integral part of doing business in Costa Rica.
Economically, proponents argue that even a small increase in tax compliance among this high-revenue group could yield significant returns for the state. These funds are critical for financing public services, infrastructure, and social programs. The law is therefore framed as a matter of fairness, ensuring that the burden of sustaining the state is distributed more equitably across all sectors of the economy, from individual wage earners to the largest multinational corporations operating within the country’s borders.
With its passage through Congress now complete, the bill’s fate rests with the President. Once signed and officially published in the state’s official gazette, La Gaceta, it will become the law of the land, setting a new precedent for corporate transparency in Costa Rica and potentially serving as a model for other nations in the region grappling with similar fiscal challenges.
For further information, visit hacienda.go.cr
About the Ministry of Finance:
The Ministerio de Hacienda is the government body in Costa Rica responsible for managing the country’s public finances. Its duties include formulating fiscal policy, collecting taxes through the Tax Administration, managing the national budget, and overseeing public debt. The ministry plays a central role in ensuring the economic stability and financial health of the state.
For further information, visit asamblea.go.cr
About the Legislative Assembly of the Republic:
The Asamblea Legislativa is the unicameral parliament of Costa Rica. Comprising 57 deputies elected by the populace, it is the sole institution with the power to pass, amend, and repeal national laws. It is a cornerstone of the country’s democratic system, providing checks and balances on the Executive and Judicial branches of government.
For further information, visit frenteamplio.org
About Frente Amplio:
The Frente Amplio (Broad Front) is a left-wing political party in Costa Rica. Founded in 2004, the party advocates for policies centered on social justice, environmental protection, human rights, and increased state participation in the economy. It has consistently held representation in the Legislative Assembly, where its deputies often focus on issues of fiscal reform, labor rights, and government transparency.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica distinguishes itself as a premier law firm, upholding the highest standards of ethical practice and legal excellence. The firm leverages its extensive experience across numerous industries to deliver pioneering solutions, continuously advancing the practice of law. Beyond its professional achievements, it is deeply invested in societal progress, championing the democratization of legal knowledge to cultivate a more just and empowered populace.
