On 16 September 2024 the OECD published the simplified peer review report on Costa Rica under Action 14 of the project on base erosion and profit shifting (BEPS).

Members of the OECD Inclusive Framework have committed to implementing the minimum standard under BEPS Action 14 on strengthening the effectiveness of dispute resolution procedures. Dispute resolution takes place through the mutual agreement procedure (MAP) in Article 25 of the OECD Model, under which countries endeavour to resolve disputes related to the application of tax treaties.

Since the conclusion of the initial two-stage peer review process in 2022, a continued monitoring process has started for all Inclusive Framework member countries. Jurisdictions that already have significant MAP experience are to undergo a full peer review process once every four years; and countries that do not yet have meaningful MAP experience are to be subject to a two-stage simplified peer review process. The report on Costa Rica sets out the results of Stage 1 of the simplified peer review of the implementation of the Action 14 minimum standard.

The peer review report notes that Costa Rica has a modest tax treaty network with four tax treaties, and a small MAP programme. Costa Rica’s experience with resolving MAP cases is very limited. The report concludes that Costa Rica meets almost all the elements of the Action 14 minimum standard. All Costa Rica’s bilateral tax treaties contain a provision relating to the MAP, and the MAP provisions are fully consistent with the requirements of the minimum standard.

The peer review report notes that Costa Rica does not have a bilateral APA programme in place. Costa Rica provides access to the MAP in all transfer pricing cases and in cases where there have been audit settlements in principle; but since 1 January 2016 it has not received any MAP requests on these issues. Costa Rica may deny access to the MAP in cases where anti-abuse provisions are applied. Also, access to the MAP may be restricted where the issue under dispute has already been decided under the judicial remedies provided by domestic law; or where the competent authority considers that the taxpayer has evaded tax obligations in any of the jurisdictions involved.

There is a documented bilateral consultation or notification process for situations where the competent authority considers that the objection raised by the taxpayer in a MAP request is not justified, but no such situation has arisen since 1 January 2016. Costa Rica has published guidance on the availability of the MAP and how it applies the procedure, but the contact details of the competent authority are not provided in the guidance.

The peer review report notes that Costa Rica’s competent authority did not deal with any MAP cases until 2021; and the four pending MAP cases were only received in 2022. However, the competent authority has recently been reorganised, and Costa Rica should ensure that the new staff members have been adequately informed of the MAP cases and are trained to manage them in a timely and efficient manner.