In Costa Rica, many companies face a reality that is often overlooked but has a significant financial impact: the accumulation of VAT credit balances.
In theory, these credits should be usable to offset other tax obligations. However, in practice, this is not always possible.
A representative case is that of companies dedicated to casino activities, which historically used their VAT credit balances to pay the specific tax that taxes this activity. Today, with the implementation of the TRIBU-CR digital system, this possibility has been restricted.
What does the law say about tax compensation?
The starting point is Article 45 of the Tax Code of Norms and Procedures, which establishes that taxpayers can offset tax credits against tax debts, provided they are liquid, enforceable, and administered by the same tax authority.
In addition, the Tax Procedure Regulations allow for such offsetting even across different taxes, which, in principle, would open the door to using VAT credits to settle other tax obligations. However, this is not the case, as regulations provide for an exception regarding VAT and the Selective Consumption Tax.
In simple terms, the law recognizes set-off as a legitimate mechanism for extinguishing tax debts.
The problem: administrative restrictions
Despite the foregoing, the Directorate General of Taxation issued Resolution DGT-R-48-2022, which establishes important limitations. This administrative rule indicates that taxes with “specific destination,” meaning those whose resources are allocated to specific state purposes, cannot be paid through offsetting.
Among these is the casino tax, whose resources finance public safety programs and the prison system.
As a consequence, the TRIBU-CR system does not allow for the automatic application of VAT credit balances to offset these types of taxes.
Is this restriction legal?
Here arises a relevant legal discussion. Neither the Tax Code and Procedures nor its regulations establish an express prohibition for offsetting taxes with a specific destination. On the contrary, the law regulates offsetting broadly, without introducing that limitation.
This raises a potential conflict with fundamental principles of tax law, such as:
- Principle of normative hierarchy: an administrative resolution cannot contradict a law.
- Principle of legal reservation: limitations in tax matters must be established by law, not by administrative provisions.
From this perspective, the restriction imposed by the Tax Administration could be legally questionable.
Practical Reality: What Companies Can Do Today in These Cases
Despite legal doubts, the operational reality is clear: it is currently not possible to carry out these types of compensations automatically in the system.
Even formal requests could be rejected based on the current resolution, placing taxpayers in a complex situation:
- They have accumulated tax credits.
- But they cannot use them freely
- And they must continue to pay certain taxes in cash.
Could this be a topic that could go to court?
This scenario opens the door to potential legal controversies.
Companies could question the validity of these restrictions before administrative or judicial instances, seeking to uphold the legal framework established in the Tax Code.
Meanwhile, the issue remains a critical point in the financial management of many companies in Costa Rica.