Mediation and arbitration clauses save headaches

By: Garland M. Baker B. 

Exclusive to A.M. Costa Rica

Editor's Note: While this article was accurate at the time of publication, some information may now be outdated. We are currently preparing a comprehensive update. Sign up for our Alerts to be notified as soon as the revised content is live!

Q. What is the difference between a good priest and Peter at the Pearly Gates?   

A. One is a mediator and the other is an arbitrator. 

Most people do not know they can pick their arbitrator in Costa Rica if they know what they are doing.

A mediator is a person who can assist two or more persons to come to an agreement, but has no decision power one way or the other if they do not.

An arbitrator moderates disputes, but in the end can decide as to who wins and who loses.

Law 7727 of Dec. 9, 1997 is titled the “Ley Sobre Resolución Alterna de Conflictos y Promoción de la Paz Social,” or law of alternative resolution of conflicts and promotion of social peace. It is a significant and under-utilized set of rules to resolve conflicts and avoid the judicial system.  

Good advice for living and doing any kind of business in Costa Rica is to stay out of the courts.  The judicial system in this country is slow and inefficient.

Income tax filing deadline is Friday in Costa Rica

By: Garland M. Baker B.

Exclusive to A.M. Costa Rica

Editor's Note: While this article was accurate at the time of publication, some information may now be outdated. We are currently preparing a comprehensive update. Sign up for our Alerts to be notified as soon as the revised content is live!

It is tax time again. Tax returns for individuals and companies are due on Friday. Yes, this Friday.

Every company is required to register with the taxman.  This registration happens when one gets a set of legal books approved at the tax authority, Tributación Directa.  The form to do so changed this year from one without a number to Form 406.  The old form had no number and was clumsy looking.  It can still be used until Friday, but starting Monday to register a company to get legal books authorized, one must use the new form.

There are several important deadlines for taxpayers in Costa Rica.  The most critical ones for expats are Dec. 15 when Form 101 for income taxes is due and March 31 when Form 110 for education and cultural taxes is due.

To be a contributor to the tax system, one identifies him or herself on Form 140.

Registering to get legal books approved is not the same as identifying oneself as a taxpayer.  However, getting legal books approved adds a company or individual to the computer system.

Many expats do not file Form 140 because they do not feel they are involved in financial activities as defined   by the tax code.  Others do not know about Form 140, and others just feel that if they do not file it, the tax collector will not catch them.