Industrialists Opposed to Tax Reform

Food companies in Costa Rica say that eliminating VAT from the basic basket in the tax reform proposal would create an incentive for imported foods, over and above local production.

Friday, August 24, 2018

The Costa Rican Chamber of the Food Industry (Cacia) reacted to the decision of the deputies to exempt VAT of 1% and 2% on the products of the basic basket in the Bill of Strengthening of Public Finances, which is being discussed in the Assembly.

See: "Costa Rica: Tax Reform Moves Forward"

In a letter sent to the deputies, representatives from Cacia said that "... the implications for the producer were not considered when the total exemption of the basic basket was approved, both the rate of 1% for agricultural products and the 2% for the rest ... the affectation will occur mainly because the motion "did not include all of the corrections that the text requires integrally, so that the prices are not affected".

Nacion.com reports that "... Part of the problem is that the inputs for production will be taxed, but not the products, therefore the producer will pay taxes to their suppliers but will not be able to transfer them to consumers. "Elements such as the possibility of applying tax credits or authorized purchases in the purchases of raw materials, inputs, machinery, equipment, services, wrapping or packaging, among many other purchases of goods and services, have not been taken into consideration," explained the vice president of the union, Mario Montero."

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