Costa Rica: Tax Exemptions Revised

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.

Friday, February 27, 2015

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.

Fernando Rodriguez, Deputy Minister of Revenue, told Nacion.com that "... The need has arisen to sort out exemptions, given the weight they have on public finances, similar to the fiscal reported deficit of 5.6% of GDP at the end of 2014. ", "... In 2012 the Treasury determined that as a whole tax expenditure had reached 5.7% of GDP. "

He also said that "... Regarding a possible fiscal plan, there have still not been any attempts to send reforms to taxes on income nor make changes to Value Added Tax (VAT). With regards to income tax, the Finance Ministry plans to introduce several articles so that the country complies with the Base Erosion and Profit Shifting (BEPS) rules of the Organisation for Economic Co-operation and Development (OECD), an organization which Costa Rica wants to become a part of."



More on this topic

Costa Rica: Review of Tax Exemptions

November 2014

The Ministry of Finance is working on a bill that aims to review and eliminate tax exemptions that have no substantiated legal justification, and create a new regulatory framework.

According to the Ministry of Finance, income not received in 2013 due to the existence of exemptions and special tax regimes was equivalent to 5.93% of GDP, of which 3.7% corresponds to the General Sales Tax, 1, 9% to income tax and 0.3% for other taxes.

Costa Rica: Global Income and VAT in Proposed Tax Plan

June 2014

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.

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.

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: Tax Reform in Election Speeches

September 2013

The main political parties running in the upcoming presidential and legislative election point to the need for tax reform.

Johnny Araya, candidate for the Partido Liberación Nacional, believes what should be done is to "create a National Tax Agency (NTA), to improve collection, as a decentralized agency of the Treasury, with a special procurement regime.

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