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 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."

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