Costa Rica Reduces Hybrid Vehicle Tax

The selective consumption tax charged on hybrid cars has dropped from 15% to 10%.

Tuesday, July 23, 2013

Among the reasons explaining the low penetration of hybrid vehicles in the Costa Rican market is the amount of taxes that are charged.

"New hybrid-electric vehicles under tariff headings 8703 and 8704, with cylinders not exceeding 2,000 cubic centimeters, will be able to benefit from a 20% reduction in the selective consumption tax," states the new provision.

"However, the 20 percentage points referred in the amendment of this decree are in respect to the selective consumption tax (ISC) existing in 2006. In May of that year, the government had already reduced the excise tax from 30% to 15% for hybrid cars ".

"If you reduce the selective consumption tax (for hybrid cars) by 10% , that means a reduction in the final price of the car for between $2,000 and $3,000," said Javier Quirós, president of Grupo Purdy Motor, importers of Toyota vehicles.

Toyota is the only company importing hybrid-electric vehicles in the country, with cylinder capacity of less than 2,000 cc, with prices ranging from $35,000 to $45,000.

Mario Rivera, manager of Banco de Costa Rica, announced credit lines for $200 million, with interest rates of between 4.83% and 5.35% to facilitate the purchase of these vehicles.

More on this topic

Exemptions for Electric Vehicles

February 2016

In Costa Rica a new bill under analysis aims to make imports of hybrid and electric vehicles exempt from sales, selective consumption and customs duties taxes.

Among the incentives proposed in the bill under discussion in the Assembly, is a 100% exemption from sales tax and 100% from the selective consumption tax on imports of motor vehicles, public transport vehicles, cargo transport vehicles and rechargeable hybrid and electric motorcycles imported into the country.

More Hybrid Cars in Costa Rica

February 2015

The tax exemption enjoyed by these vehicles is one of the factors driving their sales in the country, where three agencies are now marketing them and two are preparing their market entry.

Dealerships that have ventured into selling hybrid vehicles in recent years say the rise in sales is mainly due to these types of cars being exempt from vehicle restrictions in force in the country and because they only pay 10% of the selective consumption tax instead of 30% paid by conventional vehicles.

Taxes on Used Vehicles in Costa Rica

August 2013

Under pressure from importers the government has lowered taxes for importing used motor vehicles, but diluted the reduction by increasing the notional taxable value.

Car dealers in Costa Rica are asking for the establishment of a new formula for calculating taxes on used vehicles.

Costa Rica: Selective Tax on Used Vehicles

August 2013

Cars between 0-6 years old will incur a 30% selective excise tax with a tax burden of 53%, and those over 6 years old will incur a tax of 48% and have a tax burden of 73%.

From a press release from the Ministry of Finance in Costa Rica:

The Ministry of Finance reported today that after reviewing the effects of the update of the value of the vehicles that has been in force since December 2012, the implementation of the new Law on Transit, and the small amount of economic activity of the vehicle import sector this year, the Unit has determined an adjustment to the tax rates applicable on selective consumption, in order to give coherence to the tax system between the new values ​​and the tax rate.

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