On 25 September 2019, the Costa Rican Ministry of Finance published a resolution No. DGT-R-55-2019 on the list of non-cooperative jurisdictions for tax purposes. The list includes Bosnia and Herzegovina, Cuba, Eritrea, French Polynesia, Guadeloupe, Iraq, Kyrgyzstan, Maldives, Martinique, Montenegro, Norfolk Island, North Korea, North Macedonia, Oman, Palestine, Reunión, Saint Pierre and Miquelon, Timor-Leste, U.S. Virgin Islands, Uzbekistan, and Wallis and Futuna. According to article 9 of the Income Tax Law (ITL), there are two criteria for a jurisdiction to be included on the list; (i) have an income tax rate less than 40 percent of the rate established in Costa Rica; and 2) don’t have a tax information exchange agreement (TIEA) or a DTA with Costa Rica.
The consequence of a being included on the list is that any expenses incurred to transactions with individuals or entities in those jurisdictions on the list, directly or indirectly, will be treated as non-deductible expenses for Costa Ricans income tax purposes unless the taxpayer proves that an expense corresponds to an operation or transaction actually performed.
