Costa Rica: Effects of VAT on Construction Costs

Employers say the value added tax of 13% on services will raise end prices of buildings by between 4% and 8%, and propose a differential rate for the sector.

Thursday, October 30, 2014

The Costa Rican Chamber of Construction (CCC) states that the construction of a dwelling requires other services such as electricians, plumbers, metalworkers, architects, engineers, and others, which will eventually transfer this 13%, impacting the final cost.

Román Salazar, vice president of the CCC told Crhoy.com that "... it means according to their projections that the value added tax (VAT) of 13% will make the sector shrink to a point where tax revenues, rather than increasing, will decrease. "

'... The Chamber accepts the need for tax services, because it generates a complete structure and an information network that brings a number of benefits to the tax administration. The sector's proposal is for there to be a differentiated VAT rate of 2%. This amount differs from the one in the commercial sector. "

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The Costa Rican Union of Chambers and Associations of the Private Business Sector is proposing that the current sales tax becomes the Value Added Tax.

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