Exoneración del Impuesto sobre la Renta a Pymes

Income Tax Exemption for SMEs

An Incentive for Growth

Micro, small, and medium-sized enterprises (SMEs) play a crucial role in the economy by fostering innovation, generating employment, and contributing to sustainable development. To support this vital sector, a significant tax incentive has been established: the income tax exemption, also known as the profit or earnings tax exemption.


What is the Income Tax Exemption?


This incentive allows SMEs, whether individuals or legal entities, to significantly reduce their tax burden. Generally, a legal entity must pay up to 20% in taxes on profits earned at the end of the fiscal period, while individuals can pay up to 25%. With the exemption, these businesses can forgo paying this tax for up to six years in a staggered manner.

Staggered Benefits:

  • First Three Years: During this period, the exemption is 100%. This means the business will not pay any income tax, allowing it to reinvest those funds into business growth.
  • Fourth and Fifth Year: In these years, the exemption is 75%, meaning only a quarter of the corresponding tax will be paid.
  • Sixth Year: In this final year of benefit, the exemption is 50%, reducing the tax burden by half.


Requirements to Obtain the Exemption

To take advantage of this incentive, SMEs must meet the following requirements:

  • Revenue: They must not bill more than 120 million colones annually. This limit ensures the benefit is directed to genuinely small and medium-sized businesses that need support the most.
  • Certification: They must be certified as an SME by the Ministry of Industry and Commerce (MEIC). This certification validates that the company meets the established criteria to be considered an SME.
  • Registration: It is necessary to register as an income tax taxpayer in the year the exemption begins. This formalizes the process and ensures the business complies with tax regulations.


Why is this Incentive Important?

The income tax exemption represents a significant opportunity for SMEs to improve their liquidity and investment capacity. By reducing the tax burden, these businesses can allocate more resources to innovation, expansion, and job creation. Additionally, it encourages the formalization and growth of emerging businesses, thus strengthening the economy.

Tips to Maximize the Exemption

  • Tax Planning: It is essential to have an adequate tax strategy that maximizes the benefits of the exemption. A tax advisor can provide expert and personalized guidance.
  • Reinvestment of Profits: Taking advantage of the exemption to reinvest in the business, whether in technology, training, or market expansion, can generate sustainable long-term growth.
  • Regulatory Compliance: Ensuring compliance with all requirements and maintaining a good relationship with tax authorities is crucial to avoid problems and fully benefit from the exemption.

The income tax exemption for SMEs is a powerful tool that can boost the growth and competitiveness of small and medium-sized enterprises. Meeting the requirements and properly planning the use of this benefit can make a significant difference in the long-term success of your business.


For more information on exemptions for SMEs and how to apply for them, a tax advisor is your best ally. Do not hesitate to seek professional advice to maximize benefits and ensure the sustainable growth of your business.