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Mid-Americas Submarket Director
Published
24 August 2020
Read time
2 minutes

UBO requirements for businesses in Costa Rica

Costa Rica enacted new Ultimate Beneficiary Owner (UBO) requirements in 2019. The regulations detail an annual obligation on companies to disclose their capital and individuals with majority ownership. On 13 August a transitional measure was implemented due to COVID-19.

UBO law details

The UBO disclosure law was enacted in 2019 and applies to legal persons and legal structures domiciled in Costa Rica. According to the regulation companies are required to provide a registry of shareholders and ultimate beneficiaries that have substantive ownership, which is between 15-25% of the share capital. The first year of reporting was in 2019 and the report needs to be completed or updated annually.

Annual obligation

The first year of reporting was 2019, starting in September. There was a monthly roll out of deadlines for filing based on the last digit of the Costa Rican entity’s tax ID number. This is an annual obligation, meaning that for those entities that fall in the scope of the regulation and were incorporated before 2020, the report submitted in 2019 must be updated before September 2020, according to resolution DGT-ICD-R-06-2020 dated 26 March 2020.

For those entities, as well as branches, that were incorporated between 1 January and 31 August 2020, the first UBO report must be submitted in September 2020. Those companies or branches that failed to comply with the UBO requirements for fiscal year 2019 must submit reports for both 2019 and 2020.

Transitional measure for 2020 reporting

Due to the impact that COVID-19 has had on the economic activity of Costa Rica, resolution N° DGT-ICD-R-19-2020 was issued on 13 August 2020, meaning that filings in 2019 will remain valid for 2020. As such, companies are not obliged to present an additional declaration before September 2020, as had originally been prescribed. However, companies that have not presented the declaration for 2019 are still obliged to prepare and file the declaration covering 2019 and 2020.

Penalties

There are financial penalties for non-compliance cited in Article 82 of the Tax Procedural Code. If the UBO information is not reported, the government can penalise your business at the level of 2% of the year’s profit, which can range from a minimum of three salaries of a government employee in Costa Rica to a maximum of 100 salaries.

We can help

For companies with limited operations in Costa Rica there are certain challenges to comply with the regulation. For instance, it requires a digital signature, which is a special card with a reader that must be plugged into a computer to access the secure online bank system. This is only available to Costa Rican locals and foreigners who are resident in the country. For anyone who lives outside the country they would need to grant power of attorney to a local person to file the UBO information on their behalf. The second challenge is that all the required documents must be translated into Spanish.

Our experts in TMF Costa Rica assisted many of our clients to comply with the regulation in 2019, following all the necessary steps to ensure that the UBO information was uploaded to the National Costa Rican Bank (Banco Central de Costa Rica) online platform. This is a complex matter, but with our expertise, we are able to simplify your operations and make sure that your business is compliant with the local laws and requirements. Enquire now

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