Tax Audits in Free Trade Zones

August 17, 2021

The Diario Extra website presented a compilation of experts’ opinions regarding the new audit control policies applied by the General Directorate of Taxation for performing transactions with their related parties in free trade zones.

1. Documents Requested

The documents requested by the tax administration are the name of the company, the legal identification number, the percentage of exemption in force, the company name of the related party, the type of linkage, the main activity, the type of transaction, and the data of the tax period 2018-2019.

Additionally, they require the transfer pricing method used to analyze the transaction, the profitability indicator selected and the range obtained from the transaction, and the median of the interquartile range. This massive requirement is the first in transfer pricing matters made by the General Directorate of Taxation and has a term of 10 business days to be answered.

2. Professional Opinions

Germán Morales, managing and tax partner of Grant Thornton, explained that it is not common for the Treasury to ask for this type of data, which seems to be a special requirement to gather information on transactions with related companies. According to him:

“Taxation wants to know how much I have sold or bought from a related company and what months I have done it. It seems like they want to raise some risk to go deeper into an audit. It’s like a pre-investigation stage.”

3. New Allocation Criteria

As Morales points out, in his opinion, the new requirements have been issued after the new definition of large taxpayers in which a new mass was incorporated 15 days ago.  It should be noted that the Treasury has not updated the information on large taxpayers for 12 years and is now classifying them by level of sales and assets, among other criteria.  Based on this, the Tributarista concluded:

“If it is not for an audit, maybe what most of the companies expect, it should there be some intention to provide facilities in the services. Let’s hope that the taxpayer does not get the idea that it is only to control them because they are companies that have an important weight in the country’s tax collection. The free trade zones have always paid taxes, just that before they were in the tax administrations of Heredia, Alajuela, or Cartago and now they have been transferred to large taxpayers”.

Source: Diario Extra 17/08/21