Costa Rica is set to implement tougher Ultimate Beneficial Owner requirements in a move to combat tax evasion and other financial crimes in the country.
The new law provides a significant update to the country’s previous tax regulations and procedures and places the onus on companies to be more transparent with their capital, as well as individuals with majority ownership. The rules will be applicable to legal structures and legal persons that are domiciled within Costa Rica and will oblige them to disclose the ‘Registro de Transparencia y Beneficiarios Finales’ (Transparency and Final Beneficiaries Registry) as well as any ultimate beneficiaries or shareholders with ownership of between 15% and 25% of the share capital.
In the case of corporations, all final beneficiaries must be declared in line with the new law.
Personal information pertaining to each shareholder and ultimate beneficiary must be disclosed, including passport and identity numbers, contact information, capital, share type, and number of shares held. The information will be collected via a secure online platform linked to the Central Bank of Costa Rica and must be submitted annually by April of each year.
Each corporation must also declare all submissions and owners, under oath and any non-compliance will result in high financial penalties. The government intends to penalise non-compliant businesses at a rate of 2% of profit gained during the previous 12 months.
Any company registered by a foreigner must have granted power of attorney to a third person who has the capability to appear in Costa Rica for the presentation of such information to the Central Bank. The power of attorney can only be granted in front of a Costa Rican notary, either within the county, in a Costa Rican consulate, or in a territory where the notary is present.
Deadlines for submission of information vary depending on the last digit of the Costa Rican tax ID number applicable to the entity. For example, entities who have a tax number ending in 0 or 1 must file by the end of September 2019, with other numbers having until January 2020 to comply.
A number of fees are applicable to the new requirements including power of attorney according to the current legislation, authorisations, and registration of each shareholder. Consular fees for situations where the procedure is carried out in a consulate, as well as messengers and postage fees are additional.
Those entities who do not wish to continue the operation of a business in Costa Rica are advised to dissolute their business before January 2020. Failure to do so by this date can result in fines being applied. These need to be paid and settled before any dissolution can take place.
If you are the beneficial owner or shareholder of a Costa Rican company, these changes apply to you. To discuss your options and to take the next step that is appropriate for your ongoing business requirements, contact us today.