This is dumb move by Costa Rica and will certainly kill foreign relocation there.
Currently in Costa Rica a territorial income system is applied, which consists of taxing profits produced exclusively at the local level. If the Income Tax Law is modified, the situation could change.
On August 24th, the project called “Law for the inclusion of worldwide income in the Costa Rican tax system” was presented to the Assembly. The proposal seeks to amend Articles 1, 6 and 27 bis of the Income Tax Law (7.092).
The plan is to migrate to a world-wide income system, which consists of the taxpayer having to pay taxes on all of its income, regardless of the country or jurisdiction where the profits are generated.
Check out the “System for monitoring markets and economic situation in Central American countries“, developed by CentralAmericaData.
The new text proposed for Article 1 specifies that the “... Tax comprising the law, generating fact and taxable matter. A tax is established on the profits of individuals, legal entities and collective entities without legal personality, domiciled in the country, that develop profitable activities of Costa Rican source and in other jurisdictions.”
Carla Coghi, Managing Partner of Deloitte, explained to Elfinancierocr.com that “... ‘those words extraterritorial and other jurisdictions are what would modify article 10, if we read the current article 10 of the law (7,092) only talks about income from Costa Rican sources and does not say anything about other jurisdictions.”
According to Welmer Ramos, congressman who proposed the bill “… it is ‘urgent’ to close the door on companies that report profits abroad but escape national taxes. There are many types of tax engineering to avoid paying taxes.”
For Congresswoman María Inés Solis, the “… text is populist and could impact national productivity and drive away foreign investment, a situation that could cause impoverishment for Costa Ricans.”
See full bill (in Spanish).
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Truly a stupid move by Costa Rica, shows that even in countries with considerably better education then Panama the politicians still manage to be completely ignorant. This is good for Panama as it is already the leader for international businesses so will see that sector growing more. It is a very easy move from Costa Rica to Panama.
Yes, this would be a colossal error. The busy-body globalists at the OECD, IMF, World Bank, UN and just about every other supranational entity and NGO spanning the globe are hellbent on a mission to stamp out sovereign competition of any kind, especially tax competition. This movement to eradicate territorial taxation is not going to end unless people wake up and realize where the pressure is coming from and push back where it matters. I sincerely doubt this was passed due to a groundswell of local populist pressures, but rather was acquiesced to after years of pressure from the aforementioned entities, pressure that could include bribery as well as blackmail. Don’t think for a moment that Panamanian lawmakers aren’t under the same pressures from the world-destroying globalists. Recall that Panama already succumbed once, back around Christmas time 2013, but the law only stood on the books for a few days before somehow it was reversed. Even before the covid catastrophe Panama was at a critical juncture in its evolution as a possible ‘Singapore of the West’ due to the KYC/AML ‘witch hunting’ banks were forced to impose upon their customers following the Panama Papers fiasco – a witch hunt in and of itself. Now, for no explainable reason, Panama has been under the most severe lockdown in the entire world even though total reported deaths per million are far below those experienced by the U.S., U.K, and many other developed countries and Panama has borrowed at least $1.3B from the IMF, World Bank and IADB due to the economic destruction resulting from said lockdown. Do not be surprised if it comes out that covenants to those loans included a promise to kill territorial taxation and other globalist economy-killing measures. Also, do not be surprised if the covenants even included language forcing the government to impose the inexplicable lockdown itself (check out what happened to Belarus when the president refused a bribe connected to a $10B WB loan). What else could explain the economic suicide Panama has been so intent upon committing?