Costa Rica Mulls Eliminating 2% Retention from Tips

The union of restaurants in the country argues that tipping does not count as part of their profits and are asking for them to be exempt from the 2% retained on card payments by way of advance payment of income.

Thursday, February 5, 2015

At the moment the Ministry of Finance is evaluating the request by the Costa Rican Chamber of Restaurants, since according to representatives of this guild more is retained from them than from other stores.

Jorge Figueroa, president of these entrepreneurs, told that "... We believe that [because of] the 10% tip being calculated in the retention, as well as any 'extratip' voluntarily given by some customers means that more is retained than from other businesses. The 10% gratuity and the extra 'tip' also becomes a labor issue. "

Wílliam Zamora, partner of Bijoux and BJX Mobile signatures, added "... Any type of retention on trade, above all, on small businessness, is an obstalce to operating because the margins they work with in small business es are not the same as those of large companies. "

More on this topic

Costa Rica: Travel Agencies Excluded From 2% tax Deduction

January 2015

The Ministry of Finance has announced that tour operators and travel agencies are not subject to the 2% deduction relating to advanced income tax payment on credit card transactions.

From a statement issued by the Presidency of the Republic of Costa Rica:

The Ministry of Finance today reported that at the request of the representatives of the tourism industry, the General Department of Taxation review the status of tour operators and travel agencies and exclude them from withholding money, on the grounds that these two activities in the tourism sector supported the request with their technical studies which were reviewed by the Tax Administration Office. This exclusion does not include the hotel industry.

Costa Rica: 2% Retention on transactions with credit cards

January 2015

An injunction which since November suspended retention of 2% as an advance payment for tax on card transactions, has been declaration void.

The General Department of Taxation, at the Ministry of Finance announced that the measure will be effective immediately. "... The retention will be applied on 88% of the amount of each transaction, so effectively the amount withheld is 1.78%. "

Costa Rica: Retention of 1.77% on Card Payments

November 2014

Bankers and businessmen are pressuring the government to remove the guideline which aims to retain 1.77% of each transaction as advance payment of income tax, scheduled to start on December 1.

The private sector argues that "...The decision of the Directorate General of Taxation (DGT) ignores the fact that neither card issuers nor financial institutions in the country can be considered as 'withholding agents' as this must be defined by the appropriate Act. "

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.

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