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Registering as a small business in Costa Rica: what you actually gain

Three tax benefits, one of them worth three full years of income tax. And a VAT threshold on your rent that behaves like a cliff, not a step.

8 min readTicuenta
What small business status gives you, in tax terms: a reduced scale on income tax for the first six years, exemption from the corporate tax, and exemption from VAT on the rent of your premises. All three require being registered with the Ministry of Economy — or with the Agriculture Ministry if the activity is agricultural.

The big one: the income tax scale

Year of activityPays, of the tax determined
First, second and third0 %
Fourth and fifth25 %
Sixth50 %
Seventh onwards100 %

It applies to companies and to individuals registered in the general profits tax regime who are also registered as a micro or small business, and it runs from their first year of operations.

Watch out for a wrong version that circulates widely. You often read that the scale is “0 % the first year, 25 % the second and 50 % the third”. It is not. On the tax authority's published information, the 0 % covers the first three years, the 25 % the fourth and fifth, and the 50 % the sixth. The difference between the two versions is three years of complete exemption.

The corporate tax: exempt

Micro and small businesses registered with the Ministry of Economy are exempt from the corporate tax of Law 9428 — the one paid every January whether or not the company has any activity. What it costs otherwise.

Small and medium agricultural producers registered with the Agriculture Ministry also enjoy this exemption; but unlike micro and small businesses, only this one: the other benefits do not apply to them.

VAT on the rent, and its cliff

Leases used by micro and small businesses registered with the Ministry of Economy — or by micro and small agricultural businesses registered with the Agriculture Ministry — are exempt.
But it is not an exempt band: it is a threshold with a cliff. The law says it plainly: when the monthly rent exceeds 1.5 base salaries, the tax applies to the whole rent, not to the excess. One colón over the threshold and VAT is paid on all of it.
The case · the colón that costs ninety thousand
2026 base salary
₡462,200
Threshold: 1.5 base salaries
₡693,300
Rent of ₡690,000
VAT: ₡0
Rent of ₡700,000
VAT on ₡700,000 = ₡91,000
Difference for ₡10,000 more of rent
₡91,000 a month

It is a figure to have on the table when negotiating a lease, and to check each year when the base salary is updated.

How a small business is actually classified

Not by headcount. The regulation classifies by a parameter “P” combining three things with different weights: staff employed (60 %), net income (30 %) and assets (10 %).
P scoreClassification
1 ≤ P ≤ 10Micro business
10 < P ≤ 65Small business
65 < P ≤ 120Medium business
P > 120Large business — cannot be accredited

The formula has one version for industry and another for commerce and services, with different monetary denominators that are updated by the price index. Which is why publishing “up to 5 employees and ₡150 million” is a simplification and not the legal test: a three-person business with high assets can fall out of the category, and an eight-person one with low turnover can stay in it.

The practical consequence. Because the classification depends on three variables and the denominators are updated, the status is reviewed. Growing can move you from micro to small — losing the corporate tax exemption, which is only for micro and small — or from small to medium.

The requirements

  • The activity has to be one of those admitted

    Industry, commerce, services and the subsectors that are added. Also the real estate subsector that meets what the income tax act provides.

  • The size has to fall within the P parameter's range

    That is, it must not be a large business.

  • Being up to date

    With social security, tax obligations and employment obligations. It is the condition that stops the most applications.

The procedure

It is free and done two ways: online on the Ministry of Economy's SIEC platform, or in person at its small-business offices.

If a requirement is missing, you are notified once and have ten business days to complete it; after that the application is closed and you start again.

What is not tax, but counts

  • Access to development banking finance and to the small-business guarantee fund.
  • Participation on its own terms in public procurement.
  • Differentiated fees on various procedures and permits.
And a door Law 10512 opened in 2024. Micro businesses of up to five employees registered and active in SIEC can opt into the simplified tax regime, whatever their economic activity. But with an express exception: those micro businesses are still required to issue electronic invoices. What the simplified regime is.
From Ticuenta

The scale is applied to a figure that has to exist first

The income statement comes out of the entries, with comparatives and an Excel export: the starting point for determining the tax the scale is then applied to.

See how it works

About this article. The profits tax scale is the one published by the tax authority (updated to 15 May 2024). The VAT exemption on leases and its threshold of 1.5 base salaries is in article 8(10) of the VAT Act; the corporate tax exemption in Law 9428. The classification by the P parameter and its ranges are in articles 13, 15 and 17 of the regulation to Law 8262. Confirm the year's base salary before applying the rent threshold.

Verified as of 24 September 2026. Tax rules change. This is information, not tax advice.

Sources: Ministry of Economy, Industry and Commerce Ministry of Finance Current legal texts (Sinalevi)

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