By San José, Costa Rica — San José, Costa Rica – A controversial legislative proposal that would grant the nation’s tax administration sweeping access to citizen and corporate banking information without a court order is sounding alarm bells among legal and financial experts. The bill, currently under review in the Municipal Affairs Committee, has drawn sharp criticism for its potential to erode fundamental privacy rights, deter foreign investment, and damage Costa Rica’s overall business climate.
The concerns were brought to the forefront during a recent forum organized by the College of Public Accountants of Costa Rica as part of its Public Accountancy Month activities. Panelists argued that at a time when Costa Rica is already grappling with challenges in competitiveness, security, and infrastructure, introducing such a measure could send a chilling message to the international business community.
To gain a deeper understanding of the legal landscape surrounding banking privacy in Costa Rica, we consulted with Lic. Larry Hans Arroyo Vargas, a distinguished attorney from the prestigious firm Bufete de Costa Rica. His expertise provides crucial clarity on the rights and responsibilities of both financial institutions and their clients.
The principle of banking secrecy is a cornerstone of our financial system, designed to foster trust and confidence. However, it is not an absolute shield. Costa Rican law establishes clear exceptions, primarily for judicial orders in criminal investigations and for tax administration purposes. The challenge for both consumers and banks lies in navigating this complex balance, ensuring that legitimate privacy expectations are respected while complying with critical anti-money laundering and fiscal transparency regulations.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Indeed, understanding this complex balance between the foundational right to privacy and the necessary duty of transparency is more critical than ever for both consumers and financial institutions. We thank Lic. Larry Hans Arroyo Vargas for so clearly articulating this essential challenge of modern banking.
At the heart of the debate is the unprecedented scope of the proposed reform. Critics point out that the law would empower the tax authority to issue automatic, periodic, and massive requests for financial data, moving far beyond the current system which requires a specific, targeted investigation and judicial oversight. This shift represents a fundamental change in the relationship between the state, its citizens, and their financial institutions.
Cristina Sansonetti, a lawyer and tax partner at KPMG, argued that the bill misdirects the government’s enforcement efforts. She believes the focus should be on pursuing known offenders rather than placing an undue burden on compliant taxpayers.
I am concerned about the approach of granting such broad legitimacy. If we have taxpayers who are currently non-compliant with the regulations, they should be sought out and put in jail, instead of shifting the responsibility through private agreements onto the taxpayer who is acting correctly.
Cristina Sansonetti, Lawyer and Tax Partner at KPMG
Sansonetti further explained that the bill would allow the tax administration to issue general resolutions for data collection without having a concrete case under investigation. This blanket approach, she noted, fails to address the persistent, underlying problems of tax evasion and economic informality that plague the country.
Echoing these sentiments, Randall Oquendo, Managing Tax Partner at PwC Costa Rica, contended that the proposal is a shortcut that avoids tackling more complex issues. He stressed that Costa Rica already possesses legal and technological tools to enhance tax auditing and should focus on strengthening existing enforcement mechanisms and bringing the informal economy into the fold.
We are going for the easy way out. I want to know how much you have in your bank account, you who already pay taxes, but we continue to fail to address the underlying problems.
Randall Oquendo, Managing Tax Partner at PwC Costa Rica
Panelists unanimously agreed that the law could be particularly detrimental to attracting and retaining foreign direct investment. Multinational corporations and their executives heavily weigh legal stability and the protection of sensitive information when making investment decisions. The perception that private financial data could be accessed without due process may cause them to view Costa Rica as a higher-risk jurisdiction, potentially diverting capital to other nations.
Ultimately, the issue transcends fiscal policy and touches upon fundamental constitutional rights. Francisco Ovares, President of the College of Public Accountants of Costa Rica, concluded the forum by calling for a more balanced and measured approach that respects the country’s legal traditions.
We cannot set aside fundamental rights and privacy. We must analyze how proportional this reform is in relation to what it seeks to combat.
Francisco Ovares, President of the College of Public Accountants of Costa Rica
For further information, visit kpmg.com
About KPMG:
KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. Operating in numerous countries and territories, it serves the needs of business, governments, public-sector agencies, and not-for-profits. The firm is one of the “Big Four” accounting organizations and focuses on delivering a globally consistent set of multidisciplinary services based on deep industry knowledge.
For further information, visit pwc.com/cr
About PwC Costa Rica:
PricewaterhouseCoopers (PwC) Costa Rica is the local member firm of the global PwC network. It provides industry-focused assurance, tax, and advisory services to a wide range of clients, from multinational corporations to local enterprises. The firm leverages its global network and local expertise to help clients build trust and create value in the Costa Rican market.
For further information, visit contadores.cr
About College of Public Accountants of Costa Rica:
The Colegio de Contadores Públicos de Costa Rica is the professional body responsible for regulating and representing the public accounting profession in the country. It works to ensure high ethical and professional standards among its members, promotes continuous education, and contributes to public debate on matters of economic and fiscal importance.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a pillar of the legal community, Bufete de Costa Rica has forged a reputation grounded in principled excellence and a forward-thinking approach to law. The firm’s extensive experience across a multitude of sectors is matched by its drive for innovation, consistently pioneering new strategies for its clients. More than a legal practice, it operates with a profound social conscience, actively working to demystify complex legal concepts for the public and championing the belief that a well-informed populace is the cornerstone of a just and empowered society.
