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Great news for entrepreneurs and small businesses in Costa Rica! A new regulation that allows very small businesses (5 workers or less) to reduce their social security contributions for their workers is now in place.
Check out the press release (Spanish) from CCSS here: Rige reglamento que promueve el aseguramiento de personas trabajadoras de microempresas
We’ve translated a few of the important points below:
Having entered into force the new regulation that will allow raising contribution coverage and promoting the formalization of physical and legal microentrepreneurs settled in national territory, authorities of the Costa Rican Social Security Fund (CCSS) and the Ministry of Economy, Industry, and Commerce (MEIC) stressed that this type of action will help stimulate the national economy.
That possibility was opened when, last August, the Board of Directors of the Costa Rican Social Security Fund (CCSS) approved the aforementioned regulation by establishing a Salary Adjusted Base for micro-businesses in Health Insurance.
The Ministry of Economy, Industry, and Commerce has led the formation of this regulation by the CCSS, as the governing body of micro, small and medium enterprises in the industry, commerce, and services sectors.
The benefit will be applied to the working population of micro-businesses that set up shop, or that resume their economic activity before the CCSS under certain conditions.
The institutional disposition tries to increase the level of formality in the labor market, support the economic reactivation of the country and contribute to the financial sustainability of the institution.
The benefit will be temporary (four years) to employers and workers who begin or resume their economic activity and may have an incentive to break down the barriers that currently exist. This decision is fundamental, especially when 81% of Costa Rican business is made up of micro companies, which contribute to the generation of employment, the revitalization of the economy, and contribute to gross domestic product.
For the application of this regulation, the CCSS created a formula for the tax base, which allows reducing the base on which the employer’s and workers’ contribution to Health insurance is calculated, which will increase, progressively, for four years; until the fifth year it reaches the standard percentage quoted by all employers and their workers.
With respect to employer contributions, in the first year they will be 4.25% and, progressively, each year, that percentage will grow by 1.00%, to 7.25% in the fourth year. By the fifth year, it will be 9.25%, which is the general base.
In the case of workers, the contribution percentage will be 4.20%, and will gradually increase by 0.30% in the first three years and by the fourth year it will reach 5.00%. By the fifth year, it will be 5.50%, which is the general base.