Costa Rica: local rules

Costa Rica's arm's length rule is article 81 bis of the Income Tax Law (Ley 7092), added by the Fiscal Strengthening Law (Ley 9635) of 3 December 2018. Taxpayers with related-party transactions, with parties in Costa Rica or abroad, must set income, costs and deductions at the prices independent parties would agree. The rule applies only when the agreed price leads to lower tax in Costa Rica or a deferral of tax, and the arm's length value must show up in the income tax return. The detail is in Title V (articles 74 to 83) of the Income Tax Regulation, Decreto 43198-H of 22 July 2021. The Tax Administration may check the prices and adjust them, and it is then bound by the adjusted value for the other related parties in the country. Related parties include a direct or indirect holding of at least 25%, a common decision unit and permanent establishments, and a deal with a resident of a non-cooperative jurisdiction is presumed to be with a related party (Regulation art. 77).

There are three layers. First, every taxpayer with related-party transactions must work out its transfer prices and keep a study and support that show they are at arm's length (Regulation art. 81, last paragraph; DGT resolution DGT-R-49-2019). There is no size threshold and no filing date: the file must be ready for the DGT on request, kept for the limitation period in art. 109 of the Code of Tax Standards and Procedures (CNPT), and translated into Spanish if needed. DGT-R-49-2019 lists group information (structure, business, intangibles, financing, consolidated accounts) and entity information (functional analysis, method, comparables, three years of audited accounts). Second, an annual informative transfer pricing return (TRIBU-CR form 273) is due from large national taxpayers and Free Trade Zone companies with related-party transactions, whatever the amount, and from any other taxpayer whose related-party transactions together exceed 1,000 base salaries in the year (Regulation art. 81; resolution MH-DGT-RES-0026-2025, art. 2). With a base salary of CRC 462,200 for 2026, 1,000 base salaries is CRC 462.2 million. Third, country-by-country reporting (see the other section). The return is due within six months after the end of the tax period and is filed only on the TRIBU-CR virtual office.

Five OECD-style methods are allowed (Regulation art. 79): comparable uncontrolled price, cost plus, resale price, profit split and transactional net margin. The most appropriate method is used, and the valuation of goods with an international quotation may be used instead of the comparable price method. The comparability analysis must cover the features of the deal, functions, assets and risks, contract terms, economic circumstances, business strategies and internal and external comparables (art. 78). If there are two or more comparables, an interquartile range is built. A result outside the range is treated as not arm's length and the median is the arm's length price (art. 80). The DGT may also announce other methods by resolution (art. 79, last paragraph).

Failing to file the informative return, or filing it late or incomplete, is an information offence under art. 83 of the CNPT: a fine of 2% of the prior year's gross income, with a floor of 3 base salaries and a cap of 100 base salaries (about CRC 1.39 million to CRC 46.2 million at CRC 462,200). The fine is cut by 75% if the information is given within three days after a deadline set by the Administration, and the DGT may waive it for proven force majeure. Wrong data is fined at 1% of a base salary per wrong record, up to the cap. If a return does not get in on time for reasons that are not the system's fault, it counts as late (resolution 0026, art. 6). A transfer pricing adjustment that raises the tax can also lead to a penalty for an inaccurate return under art. 81 of the CNPT: 50% of the unpaid tax, or 100% if data were hidden and 150% if fraudulent means were used, in the cases the article sets. Reductions for voluntary correction were not checked. The CbC report is punished under the same art. 83.

Costa Rica has not enacted Pillar Two as far as could be confirmed on 27 October 2026. No GloBE law, qualified domestic minimum top-up tax or GloBE information return was found, and no bill was found. Adviser sources say Costa Rica has committed to rules in line with the GloBE model but has not presented an implementation proposal, and a May 2024 press report said the government had not defined a proposal and might not apply the tax. A tax law would be needed. So there is no Pillar Two filing deadline for Costa Rica.

The tax year is the calendar year, 1 January to 31 December (Ley 7092 art. 4, from tax year 2020). The Tax Administration may set other tax periods in general, by branch of activity, and the TP return rules still refer to a period 'authorised' for the taxpayer. The income tax return is due 2 months and 15 calendar days after year end, so 15 March, and the tax is paid at the same time (art. 20). Under CNPT art. 10, a deadline set in months ends on the equivalent day, a deadline set in days counts business days only, and any deadline that falls on a non-business day moves to the next business day. Advance pricing agreements (unilateral, bilateral or multilateral) and mutual agreement procedures are possible and an APA is valid for five years (Regulation art. 83). Costa Rica signed the CbC competent authority agreement on 27 January 2016.