Property owners that do not present value base declaration will be fined

Fine will be equivalent to the amount of tax not paid.

The new Law on Tax Management Improvement has established a new fine for those property owners that do not fulfill their obligation to present the value base declaration for their properties.

On September 28th of this year (2012), the new Law on Tax Management Improvement (Law number 9069) was published on the Official Newspaper (La Gaceta). This new Law has established very important changes on several matters related to taxes. Some of those changes have included modifications related to the payment of land taxes and the inclusion of fines for not having the value base declaration for this tax properly submitted before the corresponding Municipality.

Article 16 of the Land Taxes Law, established that property owners must submit a value declaration form every five years to the corresponding Municipality of the jurisdiction where the property is located. This value declaration serves as the base for the determination and calculation of the land taxes to be paid, subject to the terms and conditions established in said law.

Currently, the rate for land taxes is equivalent to 0.25% of the declared value or determined value of the property per year.

Up until the publication of this new Law, there were no penalties for those property owners who did not present the said value base declaration for the determination and calculation of the land taxes.

The new Law on Tax Management Improvement has established a fine that is to be imposed on those property owners who do not fulfill their obligation of presenting the corresponding value base declaration for their property. The fine is equivalent to the amount of land tax that was not paid due to not having presented the said value base declaration. Additionally, if the value base declaration is not presented, the Municipality may also proceed to determine the value base of the property for purposes of the land tax calculation.

In order to avoid this new fine, it is important that all land owners review their current situation of their value base declaration for purposes of land taxes, in order to:

1)- determine if such value base declaration has been presented in the past;

2)- in case it was presented, determine that it was presented no more than five years ago; and

3)- in case a value base declaration needs to be presented, proceed to prepare it and present it to the corresponding Municipality.