Change in VAT Exemption Procedure

In Costa Rica, taxpayers interested in benefiting from exemptions or reduced rates of payment of Value Added Tax must register with the Directorate General of Taxation.

Friday, October 18, 2019

The changes were detailed on October 15, 2019, when the resolution of the General Directorate of Taxation (DGT) No. DGT-DGH-R-060-2019, entitled "Procedure for requesting registration, special orders for the authorization of exemption or reduced rate of Value Added Tax (VAT)", was published in the Official Newspaper La Gaceta."

"... VAT taxpayers who choose to request the authorization of special orders, exemption to purchase goods and services without prior payment of the Value Added Tax or the reduced rate, as applicable, to the General Directorate of Finance, must be registered in the Single Tax Registry of the General Directorate of Taxation, under any of the following conditions:

- Exporter.
- Exporter's supplier.
- Supplier of Municipal Corporations.
- Provider of the Costa Rican Social Security Fund (CCSS).
- Trader, distributor and producer of products included in the basic tax basket, and their inputs
", Article 1 of the Resolution explains.

Regarding the changes, Priscilla Piedra, Deloitte's Tax partner, explained to that "... before the interested parties had to register using form D-300 and wait for the Taxation to verify compliance with the requirements, which are two: that the sale of their goods or services were more than 75% of those destined for export, basic basket or sales to the Box and municipalities; or that having a lower percentage VAT refunds are generated for three consecutive periods. However, this wait could take some time, which affects the cash flow of taxpayers."

Piedra added that "... Now interested parties must still register with a new form, D140, but once Tax authorizes registration and verifies compliance with the requirements later."

See Resolution No. DGT-DGH-R-060-2019.

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