Costa Rica and 30 other nations signed the Multilateral Agreement of the Organisation for Economic Co-operation and Development (OECD) on January 27, 2016. This agreement enables the Governments to collect, handle, and exchange tax information provided by Multinationals under confidentiality agreements. Specifically, Tax Administrations will be able to exchange country-by-country the multinational companies’ information with the goal of gathering a complete understanding of how Multinationals structure their operations, eliminating tax evasion.
Under this agreement, a company that has any of the following characteristics is considered a Multinational Company:
- Holds ties with two or more companies located in territories with different fiscal jurisdictions;
- Has a related company located in a foreign territory, which in turn has additional fiscal benefits in comparison with its country of origin.
The Agreement forms part of the OECD-BEPS program which aims to fight against the practice of profit transfers of a business in one fiscal jurisdiction to another in which the treatment of profit is more beneficial.
Based on OECD guidelines, the Agreement is not an International Treaty which means that the text of the agreement does not need to be ratified by the Costa Rican Legislative Assembly, and therefore can be implemented in 2016.
It is now the responsibility of the Costa Rican Tax Administration to define the parameters for the launch and compliance of the Agreement which will then be evaluated by the OECD in 2020.