provisionally-largely-compliant

Costa Rica

To see the determinations and rating of all published reports click here.

Overall rating is Provisionally Largely Compliant

Costa Rica has been reviewed under the fast-track procedures and assigned provisional overall rating. Costa Rica will be scheduled to undergo a full review under the strengthened 2016 Terms of Reference in the near future.

Table of Determinations and Ratings of the Phase 2 Review

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1)
Determination Factors Recommendations
The element is not in place.   An EIRL is only required to file the name of the manager at registration; therefore unless the manager and owner are the same person, ownership information on an EIRL may not be available.  Costa Rica should ensure that ownership information on EIRLs is available. 
Although a trustee of a foreign law trust would be liable to tax on Costa Rican source income of the trust, there are no requirements for the trustee to maintain ownership information.  Costa Rica should take measures to ensure that information is available that identifies the settlor and beneficiaries of foreign trusts. 
There are no express penalties in place for limited liability companies and partnerships that fail to register or update registration information. In addition, there is no penalty for a limited liability company that fails to maintain a share register.  Costa Rica should put in place effective enforcement provisions to ensure the availability of information for limited liability companies and partnerships. 
Phase 2 Rating Factors Recommendations
Non-Compliant.  During the review period, Costa Rica did not have a regular oversight program in place to ensure compliance with the obligations to maintain ownership and identity information, particularly for inactive entities, and penalties for non-compliance were unenforced in practice.   Costa Rica should put in place an oversight program to ensure the compliance of the obligations to maintain ownership and identity information for all relevant entities and arrangements and exercise its enforcement powers as appropriate to ensure that such information is available in practice. 
   
   
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Costa Rican legislation does not ensure that reliable accounting records or underlying documentation are kept for foreign trusts which are administered in Costa Rica or in respect of which a trustee is resident in Costa Rica.   Costa Rica should ensure that all relevant entities and arrangements maintain accounting records, including underlying documentation.  
Phase 2 Rating Factors Recommendations
Partially Compliant.  During the review period, Costa Rica did not have a regular oversight program in place to ensure compliance with the obligations to maintain accounting information, particularly for inactive entities, and penalties for non-compliance were unenforced in practice.   Costa Rica should put in place an oversight program to ensure the compliance of the obligations to maintain accounting information for all relevant entities and arrangements and exercise its enforcement powers as appropriate to ensure that such information is available in practice. 
Banking information should be available for all account-holders. (ToR A.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Largely Compliant.  Costa Rica’s ability to access bank information in connection with civil tax matters pertaining to taxable period prior to 1st October 2012 is limited by Costa Rica’s interpretation of its domestic legislation.  Costa Rica should ensure that all relevant bank information may be accessed for EOI purposes, in accordance with the terms of the applicable EOI agreement, to give full effect to all its EOI agreements. 
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Exchange of information mechanisms should provide for effective exchange of information. (ToR C.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Largely Compliant.  Costa Rica’s ability to access bank information in connection with civil tax matters pertaining to taxable period prior to 1st October 2012 is limited by Costa Rica’s interpretation of its domestic legislation.  Costa Rica should ensure that all relevant bank information may be accessed for EOI purposes, in accordance with the terms of the applicable EOI agreement, to give full effect to all its EOI agreements. 
The jurisdictions' network of information exchange mechanisms should cover all relevant partners. (ToR C.2)
Determination Factors Recommendations
The element is in place.     Costa Rica should continue to develop its EOI network with all relevant partners. 
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdictions' mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5)
Determination Factors Recommendations
The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase 2 review.      
Phase 2 Rating Factors Recommendations
Compliant.     

Earlier self-assessment based annual reports entitled Tax Co-operation 2010: Towards a Level Playing Field are also available.