The Tax Administration has submitted a draft institutional criterion on this matter for public consultation.
The importance of this project to become an official interpretative criterion of the DGT is that it recognizes, in my opinion and indirectly, the illegality of Article 47 of the Regulations to the Income Tax Law that creates a taxable event because it assumes that at the maturity of an investment of a security issued in foreign currency, the conversion to colones must be made in order to determine a gain and pay the tax even though the same has not been made because the investor acquired another security in foreign currency, which would happen if he renews his security, for example, without liquidating the investment or changing currency.
The proposed criterion seems to correct that and states that "no gain or loss from exchange rate differential will be considered until there is an effective exchange of foreign currency to domestic currency".
But it is not possible to create a taxable event by means of a regulation. But neither can you fix it through interpretation, even if it is by means of an institutional criterion.
Now, the bill states that the criterion would not be applicable to the tax on profits. Ok, but when it does it states that "in which case the return of the capital may generate a capital gain or loss due to exchange rate differential, taxable in ISU at the time the capital is returned due to the maturity of the investment, regardless of whether it is renewed or exchanged to local currency".
Then, the problem that this project seems to try to solve, is now created and via criteria, for the taxpayers of the tax on profits !!!. What happens with a profit tax payer, who has an investment in a financial security and at its maturity renews it without changing currency, is that the criterion forces him to record the gain as if he had liquidated the security. In other words, the criterion removes the problem for the taxpayers of the capital gains and income tax but transfers it to the taxpayers of the income tax regime. All via interpretation.
I end with a comment on the mandatory nature of this criterion: the interpretative criterion is not really mandatory for taxpayers but it is for officials and it is a clear indication of the position of the authorities on an aspect that generates doubts or that admits different interpretations. What this means is that in the face of an intensive control action (audit), the taxpayer who would have applied the rule differently from the criterion, could be exposed to adjustments and penalties, but his right to oppose the position of the authorities would be intact.
Therefore, the criterion is not a requirement for the validity of the rule and the statement that the criterion "governs" does not detract from its declaratory nature and affirms its non-constitutive and predominantly didactic character for the interpreter, who is then entitled to interpret the same or differently than the DGT.
Receipt is acknowledged: The U.S. Justice Department accuses Donald Trump of hiding documents classified as secret. Mikhail Gorbachev, last leader of the former Soviet Union, dies. Chaves ousts his communication minister. Gazprom, a Russian company controlled by the Kremlin, announces the indefinite suspension of gas supplies to Europe through the Nord Stream I pipeline. An attempt is made on Cristina Fernandez's life in Argentina. In plebiscite, Chile rejects new constitution project to change social and political model.