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Rules about Cash Payments to be accepted for income Tax Purposes

    Costa Rican tax Administration, by means of document DGT-R-017-2013 has created new rules regarding payments in cash that will not be accepted for income tax purposes. Generally these are the parameters:

    a)      Payments for amounts higher than 3 times the based salary (“Salario base”) will be accepted only if they are made not in cash, but through a Bank. (Checks, wire transfers, credit or debit cards or others.) Bank transactions must identify the payee or Beneficiary.

    b)      Payments higher than 15% of the based salary (“salario base” ) but lower than 3 times the base salary, will be accepted if made in cash, but a voucher or receipt will be required including the following data:

    1. Name, last name and ID of the person receiving to whom the cash is delivered
    2. Name, last name and ID of the vendor providing the goods or services (if a natural person, not a legal entity)
    3. Name and corporate ID of the vendor, in case of a legal entity;
    4. Receipt number of the voucher issued by vendor;
    5. Total payment amount delivered to the vendor;
    6. Signature of the person receiving the payment;
    7. A Representation made by the person delivering the payment stating:
    i.       the name of the person to whom the cash was delivered; and
    ii.      ID number of who is received the cash with an statement saying that who delivers the cash has confirmed that such ID corresponds to the person receiving the cash;
    1. Name, last name, ID and signature of the person who is delivering the cash to the payee.
    c)       Payments for amounts lower than 15% of the based salary can be made as it has been usual until now.

    d)      There are special rules for debts compensations among tax payers in which bank transactions are not used and for which certain cases are exempted from the rules above. So, consult your accountant or tax advisor about it if this is your case.

    e)      These rules will become in effect on June 1, 2013.

    f)       For the year 2013, the base salary (“salario base”) corresponds to the sum of ¢379,400.00. (CR Colones). This amount varies every year.
    Jeimy Quesada
    E&T Escrow and Trust Solutions SRL

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