Costa Rica: VAT on Telecommunications

Requests have been made for the clarification of which telecommunications services are to be taxed with VAT, since it is unclear whether it is information services or telecommunications which would be taxed.

Wednesday, March 18, 2015

Currently telecommunications services are charged sales tax, even though the Costa Rican government aims to close the digital divide. With this new reform proposal, a Value Added Tax (VAT) of 15%, "would be incurred ... It would be the first time that telecommunications services are integrated into a tax

Fabio Masís, director of the Chamber of Information and Communication Technology (Infocom) told that "... It is a contradiction because by taxing services with VAT citizens are obviously going to see a rise in costs or have less access. It is a tax that directly affect users, not operators, for that reason it is reasonable to reconsider the Treasury's intentions in this reform proposal. "

He added that "... I hope that with the amendment, there is clarification about what type of telecommunications services the Treasury is referring to, as some such as text messages are confused with telecommunication services, when in the country they are classified as information services. "

More on this topic

Costa Rica: Single Tax of 15% on Financial Income

March 2015

If the Treasury's proposal succeeds, interest on bank deposits would incur 8% to 15%, while for revenues generated by mutual funds, the tax would rise from 5% to 15%.

This unification is due to the fact that currently there are different taxes for similar types of income, therefore the tax is not neutral, according to the CEO of Taxation.

Costa Rica: Telecoms Moving Slowly

January 2015

Even though demand continues to grow, operators are not able to grow due to lack of effective competition in the mobile market and delays in the allocation of spectrum.

A portion of customers in the cellular market and other telecommunications services such as internet and cable television are still dissatisfied, but telecommunications companies are not able to increase their services due to the slow rate at which the rules are set and at which infrastructure problems are addressed.

Costa Rica: Deregulation of Cell Phone Rates

April 2014

Regulation of mobile telephony tariffs is preventing the development of efficient services and competition between operators.

Removing the tariff regulations on cellular services and improving the availability and access to broadband should be a priority for the new government, say experts in the field.

Internet Access Will Pay Sales Tax

April 2011

In Costa Rica the tax authority (DGT) interpreted that internet access should pay sales taxes (13%).

This has caused negative reactions from many sectors, for example the Technology Chamber, headed by Fabio Masís, stated that “prices are expected to increase, with negative consequences on low income users”, and that this decision violates the Constitution.

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