In 2017, Costa Rica introduced formal transfer pricing documentation requirements, bringing its practices in line with OECD guidelines. Despite becoming an OECD member in 2021, the country’s tax laws do not explicitly mention OECD Transfer Pricing Guidelines. Nevertheless, Costa Rican regulations follow the arm’s length principle and impose systematic transfer pricing duties, including comprehensive documentation that aligns with OECD recommendations.
Costa Rica’s Income Tax Law lays out criteria for determining related parties and related party transactions. Various scenarios, from capital ownership to unity of decision-making, determine related party status. Additionally, the law considers tax havens as potential factors indicating related party transactions.
Costa Rica’s transfer pricing requirements apply to large taxpayers and companies engaged in cross-border related party transactions. While there are no specific filing deadlines, companies must prepare master files and local files, which closely resemble OECD standards, and have them available for tax authorities upon request.
Taxpayers can request advance pricing agreements, but disagreements with tax authorities are non-appealable. Costa Rican tax authorities may perform transfer pricing audits to ensure transactions with related parties adhere to arm’s length principles.