Over the past thirteen years, Costa Rica has undergone a profound process of tax reforms. During this time, there has been no legislative change to the principle of territoriality, nor has the interpretation of the producing source, as developed by the Tax Administration, been formally adopted. Furthermore, the law does not include references to the “economic structure and producing source.” On the contrary, territoriality has been reinforced, and Art. 6, paragraph ch), of the Income Tax Law remains unchanged.
However, at the judicial level, an extensive interpretation of territoriality was validated, even under a constitutional analysis. This created an atmosphere of legal uncertainty for taxpayers, as it left it to the discretion of the Tax Administration to determine whether income generated abroad was taxable or not.
The absence of regulations to subject extraterritorial income to taxation was so evident that, in February of this year,
