Earlier this month, the Costa Rican General Direction of
Taxation (DGT or Dirección General de Tributación,
in Spanish) released draft rules for annual transfer pricing for
public consultation. Originally enacted in 2013, Decree 37898-H protects the principle of
The filing requirements are applicable to individuals and
business entities that conduct intercompany transactions and fit
into one of the following categories:
A natural or legal person that
directs or controls another natural or legal person or held,
directly or indirectly, at least 25% of its share capital or voting
Five or fewer people direct or
control both legal persons or possess, as a whole, directly or
indirectly, at least 25% stake in the share capital or both
people's voting rights.
Legal entities constituting a same
decision unit or that belong to a related company.
Two or more legal entities forming a
decision unit each, regarding a third legal entity.
Businesses operating under free trade zone regimes, 'large
taxpayers' and multinationals engaged on domestic cross-border
transactions with related parties also need to comply with
What should I do?
Taxpayers must submit the required information electronically on
the last day of June every year; which must be consistent with the
taxpayer's transfer pricing study. The first transfer price
return is due on June 2017, and should be based on the 2015 fiscal
year. Taxpayers who do not comply will face a penalty equivalent to
2% of gross income for the previous fiscal year.
If the resolution gets approved, businesses operating in Costa
Rica must review all the current transactions to determine whether
they comply, and make sure to have the relevant supporting
documentation that may be needed for future intercompany
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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