Costa Rica Gazettes Country-By-Country Reporting Rules

On February 2, 2018, Costa Rica published Resolution no. DGT-R-001-2018 in its Official Gazette, setting out the rules for filing a country-by-country report.

The parent company of a multinational group resident in Costa Rica with consolidated group revenue of the equivalent of EUR750m in the Costa Rican currency – presently CRC529.3m (USD924.7m) – must comply with the obligation to file a country-by-country report, in line with the rules set out in the Resolution, which is intended to align Costa Rica’s transfer pricing documentation regime with the recommendations put forward by the OECD in its Action 13 report on tackling base erosion and profit shifting.

The CbC report is one element of a new three-tiered standardized approach to transfer pricing documentation proposed under BEPS Action 13. Under the framework, MNEs are required to provide aggregate information annually for each jurisdiction where they do business, relating to the global allocation of income and taxes paid, together with other indicators of the location of economic activity within the MNE group. It also covers information about which entities do business in a particular jurisdiction and the business activities each entity engages in.

The obligation to file a CbC report typically falls to the ultimate parent entity where it is tax resident. However, where this is not possible, and subject to certain other conditions, a surrogate parent entity may be elected to file a report instead.

The Resolution provides that groups covered by the regime must identify the entity that will file a CbC report by the last working day of the month of March each year, beginning in March 2018, through an official letter that must be sent digitally and signed by the local representative of the entity, addressed to the Director General of Taxation. The same deadline and rules apply to groups whose ultimate parent entity is in Costa Rica that have elected to file a CbC report in a different territory. In both cases, these should be sent to the following email address: tributacioninter@hacienda.go.cr

The Resolution provides that regardless of the month in which a reporting entity’s fiscal period ends, the first CbC report must be furnished by December 31, 2018, at the latest, relating to the 2017 fiscal year. The same schedule applies to future years; the CbC report is required by December 31 of each year following the relevant fiscal period.

Three tables in the annex to the Resolution sets out the information that must be provided, with instructions.

Article five of the Resolution provides that the CbC reports should follow the OECD XML schema, to enable them to be shared multilaterally, and links the OECD’s guidance in this respect: “Country-by-Country Reporting XML Schema: User Guide for Tax Administrations and Taxpayers.”

The resolution highlights that Costa Rica will share CbC reports with other jurisdictions through the OECD’s Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports, with Costa Rica having signed the agreement in January 2016.