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Costa Rica Cracks Down On Tax Evaders

by Mike Godfrey, Tax-News.com, New York

16 October 2001


As part of the Costa Rican tax administration's national plan to combat tax evasion, a new initiative has been launched which is expected to bring in an extra ¢2 billion (US$6 million) in previously unpaid income taxes this year.

General Director of Taxation, Adrián Torrealba, explained that third parties such as credit card companies, employers and customs officials are now required by law to provide information related to individuals income to help the Tax Administration check the accuracy of tax returns.

This process of 'data comparison' is already underway; information provided by the third parties in November last year for tax claims filed in December is currently being scrutinised. 'We're sending a message to taxpayers that the administration is on the way to handling better information that will allow us to discover huge discrepancies, and without resorting to the costly auditing process,' Torrealba told The Tico Times.

Already it has been discovered that a taxpayer who did not file a tax return last year had received around ¢7,430,000 (US$22,000) in service sales and commissions, and after initial calculations were made the administration collected ¢945,408 ($2,800) from the individual.

The tax administration also cited another example whereby a company reported last year that its net sales amounted to ¢186,850,000 (US$563,000), but failed to report income from services, totaling ¢4,375,000 (US$13,200) and it was forced to pay an additional ¢832,000 (US$2,500).

'The administration is working to increase the quantity and quality of information at our disposal. By increasing our information sources, we can get more exact ideas of who should be paying their taxes, and increase our taxpaying base,' Torrealba said.

He also announced the administration's next aim to pass legislation that will relax banking privacy laws so tax collectors can have access to financial information from banks.

Finally, the department said that a web site due for launch in December will enable tax payers to submit their returns online; a five per cent discount will be on offer for those who pay their taxes electronically.


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