Costa Rica
The country profile includes data on the income taxes paid by workers, their social security contributions, the family benefits they receive in the form of cash transfers as well as the social security contributions and payroll taxes paid by the employers. Results reported include the average and marginal tax burdens for eight different family types.
It also describes the personal income tax systems, all compulsory social security contribution schemes and universal cash transfers as well as recent changes in the tax/benefit system.
The national currency is the Costa Rican colon (CRC). In 2013, the average exchange rate was CRC 490.67 to USD 1. In that year, the average worker earned CRC 5 607 302.63.
The Report includes estimates of the tax wedge over the whole of the income distribution ordered by deciles of total labour income of formal wage earners derived from the household surveys.
1. Personal income tax system
The fiscal year runs from October to September.
1.1. Central government income tax
The Costa Rican income tax is applied to the income in cash or in kind, both continuous or occasional, from any Costa Rican source obtained or accrued by individuals or legal entities domiciled in the country;
Costa Rica’s labour legislation provides for a payment of an additional salary or «bonus» paid in December of each year. The amount is determined by the worker’s monthly average wage from all sources. It is exempt from the income tax.
1.1.1. Tax unit
In this report, it is assumed that members of the family are taxed separately. In practice, spouses may opt to file a joint tax return for the household.
The personal income tax applies to Costa Rican nationals receiving income from a Costa Rican source, regardless of whether or not they have resided in the country during the relevant fiscal period.
1.1.2. Tax allowances and tax credits
1.1.2.1. Standard tax credits
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CRC 16 080 for each child in the household.
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CRC 24 000 for the spouse, which can only be claimed by one of the spouses.
1.1.2.2. Main non-standard tax allowances and tax credits
None
1.1.3. Tax schedule
The annual income tax liability was calculated on the taxable income according to the following schedule in 2013:
1.2. State and local taxes
No state or local taxes are levied on wages.
2. Compulsory social security contribution to schemes operated within the government sector
2.1. Employee contributions
The employee contributions are levied on the gross wage. The lower earnings threshold is the minimum national wage, which was equal to CRC 3 106 464 in 2013.
2.2. Employer contributions
Employers are required to contribute to the following public programs.
The employer contributions are levied on the gross payroll.
3. Universal cash transfer
3.1. Amount for spouse and for dependent children
None.
4. Main changes in tax/benefit since 2013
The tax schedule for the 2015 fiscal year was as follows:
The contribution rate for the employee social security contributions to the old age, disability and death program were increased in 2015.
The employer social security contribution rate for the same program was also increased.
5. Memorandum items
5.1. Identification of an AW
The data refer to the earnings of workers within the formal sector. The average worker’s wage was calculated using microdata from the national household surveys.