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13.4.1. Specific TP Issues

Management Fees

In general, management fees are deductible as long as they are properly documented and incurred for the production of taxable income. Note, however, that payments to parent companies for technical services, franchising, the use or the right to use intellectual property rights and similar are deductible typically only up to 10% of turnover.

Management fees are subject to withholding tax, though the tax can be reduced by applicable tax treaties.

Financing Costs

See Sec. 13.2.

Commissionaire Arrangements

Commissionaire arrangements are generally allowed in Costa Rica, although they are not specifically addressed under transfer pricing rules. Each arrangement should be evaluated on a case-by-case basis.

Cost Sharing Agreements

There are no specific transfer pricing rules with respect to cost sharing agreements (CSA) and such agreements must be evaluated on a case-by-case basis. Payments related to CSAs are generally deductible as long as they are properly documented and incurred for the production of taxable income.

Transfer Pricing Adjustment Penalties

Costa Rica's transfer pricing rules do not include specific penalties for transfer pricing adjustments. General penalty provisions apply (See Sec. 14.5.).

Disclosure Requirements

Taxpayers engaged in domestic or international operations with related parties, and those treated as large taxpayers, large regional companies, or companies under the free zone regime are required to disclose details of their transactions on an annual basis with their tax return.