Costa Rica: Global Income and VAT in Proposed Tax Plan

Replacing Sales Tax with VAT, applying a system of global income and maintaining exemptions in free zones are part of the projects being prepared by the government.

Thursday, June 19, 2014

With the three projects he plans to introduce in the Legislature, the Executive leader intends to increase total tax revenue to 2% of GDP in two years and completely eliminate the primary deficit, which at the end of 2013 was 2.8% of GDP.

Although the suggested initiatives are not very different from those proposed by the administration of Laura Chinchilla, Fernando Rodriguez, deputy finance minister, told Nacion.com that "...One project, apart from these, intends to replace the current sales tax of 13%, with a value added tax (VAT) taxing services without increasing the rate. In addition, a second project introduces the system of global income. "

"... The vice minister thought it was unlikely that exemptions related to basic goods would be removed, although he said they would study the impact of inserting or removing goods from that group of foods according to consumption in the various social sectors ... The third bill by entering the whole is known as "tax evasion". This had already been announced in early June and aims to streamline and harmonize information shared by the Ministry of Finance, municipalities and the Costa Rican Social Security and to make cross-checks. "



More on this topic

Costa Rica: Tax Exemptions Revised

February 2015

As part of a plan to reduce the fiscal deficit, the Finance Ministry is preparing a bill which aims to amend the existing tax exemptions scheme.

This project also seeks to create penalties for 1,259 misuse of tax breaks reported by the Technical Services Department up until 2014. It is anticipated that the initiative will be submitted to the Legislature in no more than two weeks.

Costa Rica: Minister Calls for Tax Rise

October 2014

The Vice President and the Minister of Finance have insisted that the Assembly adopt a draft law to establish global income and convert the sales tax into value added tax.

This December is the date set for the plan to convert to sales tax into value added tax (VAT) and for the first quarter of 2015, the bill on global income. Also in 2015 a draft law will be submitted on the Framework Law on Exemptions.

Costa Rica: Anti Tax Evasion Bill

June 2014

The new Solís administration plans to establish the Value Added Tax and demand proof of tax payment for procedures in public institutions and on application for bank loans.

The tax reform being prepared includes a bill to reform income tax. This is part of a project by the Ministry of Finance which includes 55 specific actions among which are changes in the area of ​​income, reducing government spending and control of state borrowing.

Costa Rica's Fiscal Deficit: Official Projection Falls Short

March 2013

Costa Rica could have a greater fiscal deficit than the 4.8% estimated by the Central Bank for this year, reaching 5.1% of GDP.

According to the Fiscal Studies Program by the School of Economics at the National University of Costa Rica, this projection was based on total tax revenues increasing by 8.7%, taking into account a lower tax income and Customs taxes (due to a fall in imports) and also an increase in total expenditure of 11.5%.

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