SAN JOSE – Costa Rica is far from being considered a Paraiso Fiscal (offshore financial heaven), unlike other countries in the Central American and Caribbean regions have been labeled. While some revenue collection and levy practices in the country are decidedly lax, that could soon change if the National Assembly and the current administration find some common ground.

One of the taxes that the Ministerio de Hacienda (the Treasury and Revenue Collection Agency) has always been very serious about collecting is the assessment on luxury properties. This is a tax that has only been around for a few years, and it was enacted to fund low-income housing projects and to fight against squatting practices. When the tax was approved in 2008, it was designed to last for a decade, although political analysts think that it may be extended beyond that time frame. Among the rules that were promulgated along with Law Number 8683 is the deadline for paying such taxes: January 15 of each year. The Ministry announced that it is using data obtained by the INEC in the recent census to determine the whereabouts of the homeowners who are subject to this tax.

Homes that are valued 106 million colones and higher (more than $212K) are generally subject to the luxury tax. The value must be electronically certified every three years on January 15. The percentage of tax due increases according to different brackets: from 0.25 percent for homes valued up to 277 million colones (less than $550K), to 0.55 percent for opulent estates valued at more than $3 million. The tax can be calculated with a tool found at the Revenue Collection website, and it can be paid online, at BAC San Jose or through Banco Nacional Internet Banking.

Thanks to scathing criticism lobbied at Revenue Collection in the past, the government agency has taken certain measures to insure the payment of the luxury property tax. Back in 2009, the initial deadline for payment had to be changed from December 31 to January 15 when a scant 14 homeowners had bothered to file and pay the tax. The Ministerio de Hacienda proceeded to expose tax evaders by shaming them in public lists. At the end of November 2011, a list of 100 people who had filed for construction permits to build expensive real estate was divulged by Revenue Collection Director Francisco Villalobos. Non-payment of tax usually leads to fines tacked on to the amount owed, plus interest accrued. The fine has been reduced in recent times, but tardiness and delinquency are still problematic. At the end of January 2011, Revenue Collection had reported a shortfall of 22 percent in payments compared to the previous year.

The first wave of luxury tax payments received last year corresponded to over 2,200 taxpayers, netting about $4 million before the Treasury authorized measures such as public shaming and refusing to issue construction permits until all assessments have been paid. The Treasury Minister has vowed to continue looking at different revenue and taxation options to bridge the deficit gap, an effort which he claims paid off to some extent in 2011.