Wednesday, January 16, 2013
Fiscal Hill vs American's Living in Costa Rica
The fiscal hill is a challenge for expats in January
They call it the cuesta de enero, the financial hill in January. This is the time when many of the Christmas bills come home to roost. And there are other expenses.
The month is the opposite of the U.S. fiscal cliff. Like the mythological king of Corinth, Sisyphus, Costa Ricans and expats are pushing a giant financial boulder up a hill. And for owners of businesses, the slope is steeper.
The January hill really begins in December.
Dec. 15 was the deadline for paying the monthly amount due to the Caja Costarricense de Seguro Social. Most businesses have to make this payment, but so do expats with employees.
Dec. 15, or actually last year Dec. 16 because of a misbehaving central computer, was the deadline for 2011-2012 income tax, impuestos sobre la renta. That also is the monthly deadline for sales tax payments for the previous month and certain other payments, mostly by businesses.
Optional, of course, are Christmas gifts to service providers: The trash haulers, guards, delivery persons and others figured in daily life. And then there is Christmas itself.
Not optional and due by Dec. 20 were the aguinaldos, the obligatory Christmas bonuses for employees for 2012. Each should have been a month's pay. Employers who did not pay, and that includes expats with part-time help, might find themselves in labor court in the new year.
Dec. 31 was the deadline for paying the first quarterly municipal fee for a business license in the 2012 and 2013 fiscal year. This is supposed to be based on a company's income, but most firms sidestep this rule and pay a little as they can.
Dec. 31 also was the deadline for paying without penalty the national road tax or marchamo. The better the car, the bigger the bite. Traffic cops love expats who forget to pay this.
And the fourth quarter of municipal real estate taxes also was due Dec. 31.
Now in January, the real uphill climb commences.
Jan. 16, today, is the last day to pay without penalty the impuesto solidario or the so-called luxury home tax. This is a special assessment on homes and lots estimated to be worth 117 million colons or more. Expats already paid an expert to make the estimate of value. Now it is time to pay the central government with the hope that officials actually will use the cash to purchase housing for the poor. The Dirección General de Tributación said Tuesday it once again was adding an extra day to the deadline because its computer was overwhelmed. It said 2,126 persons had paid the luxury home tax. The penalty for late payment is 189,700 or currently $386. The tax itself depends on the value of the home.
Jan. 16 also is the new date for reporting and paying the December sales tax for businesses and any withholdings from employee pay. Tributación said Tuesday that it already had received 49,983 sales tax declarations and 6,000 reports of withholdings. The agency is trying to shift all its payments onto computers. The agency's computer system has been a challenge.
Jan. 31: This is the deadline for paying that special tax on corporations. As A.M. Costa Rica reported the day after Christmas, the tax has gone
La cuesta de enero!
up because the judicial salary on which it is based increased. For active corporations, the tax is 189,700 or currently $386. Owners of inactive corporations pay half that. Many expats have vehicles or homes in corporations, active and inactive. No form is necessary. Tellers at Banco de Costa Rica just need the number of the cédula juridica.
Some expats are confused because the tax was less last year because the amount assessed only covered part of 2012.
Jan. 31 also is the last day for paying the salario escolar a way by which employees of private firms can accumulate money to pay school expenses. The money is deducted from each paycheck, and employers have to pay the full annual amount and social charges by this date. The employee gets a break because income tax is not assessed on the amount.
For public employees, the salario escolar is a bonus, also paid in January. It represents about 8.19 percent of the annual salary and is considered a savings rather than salary. But social charges like Caja payments are assessed. Some 141,000 public employees are getting 94 billion colons from the national treasury during January, said Tributación. The amount is $191 million.
Employees will need it. Public school starts Feb. 6, and anyone with a child in public school knows that the country's free education has a few footnotes. There are uniforms and shoes to purchase and items on a long list provided by the school. Youngsters have to have all these items on the first day. Some poor kids do not go to school because parents cannot afford the extras.
Parents with children in private school, including many expats, have to pay a sometimes stiff tuition or at least part by the beginning of school.
Jan. 31 also is the deadline for paying without penalty the annual rental of a postal box at the local office of Correos de Costa Rica.
According to Costa Rican law, income tax payments and the new corporate tax are not deductible for filing purposes. So when a firm that is subject to income tax payments files a return it is, in effect, paying a 30 percent tax on the taxes they already have paid. The rate is variable for individuals.