Costa Rica: Banks to Retain 2% of Card Payments

Businesses will receive 2% less from the banks for payments made by customers using credit and debit cards, by way of advance payment of income tax.

Thursday, August 28, 2014

A decision by the Directorate General of Taxation, published in La Gaceta says that banks must start making a deduction of 2% of the amount which corresponds to the business on card payments received from October 1.

Ronald Jimenez, president of the Costa Rican Union of Chambers and Associations of Private Business Sector (Uccaep), said "... we are concerned for small businesses, working with a profit margin of 5% to 7%."

Gerardo Corrales, executive vice president of Grupo BAC Credomatic commented "... 'This resolution took us by surprise ; we are concerned about the short time frame in which we have to implement it and the technological developments, and in turn, the implications on the cash flow of some of our customers who have profit margins of less than 2%.'"

More on this topic

Honduras: Conflict Over Withholding of Sales Tax

February 2017

A resolution by the tax authorities establishes that withholding of sales tax will from now on be done by the card issuer, and not the trader.

The business sector has stated that this was not what was decided together with President Hernandez when the scope and characteristics of the new Tax Code were defined and is asking for the resolution by the SAR to be declared invalid and for retention to once again be made by traders.

Costa Rica: Retention of 1.77% on Card Payments Suspended

December 2014

Retention of 1.77% on card payments, as advance income tax, was scheduled to take effect on December 1, but has been suspended by a court order.

From a statement from the Chamber of Commerce of Costa Rica reads:

The Chamber of Commerce of Costa Rica has received the decision of the Administrative Court which puts a halt to the entry into force of the retention of 2% of transactions made using credit or debit cards, a measure that would principally affect companies in the commercial sector.

Costa Rica: 2% Retention on Card Payments Postponed

October 2014

The Ministry of Finance has postponed until December 1 the beggining of the 2% tax which will be retained by financial institutions on card transactions.

The aim of this extension is to give banks more time to adapt their systems and make adjustments seeing as they are the entities that must make the retentions.

Costa Rica: Controversial Credit Card Regulations

February 2010

New regulation to be enacted by the Economy Ministry has created controversy among credit card issuers.

Velia Govaere, vice minister, commented that the proposed changes will introduce more information transparency.

On the other side, Gerardo Corrales, CEO of BAC San José, argues that the changes would increase costs and complicate the operation of credit card issuing companies.

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