NO to Financial Transaction Tax

In Costa Rica, the Alvarado administration would be considering the creation of a tax on each transaction that a person or company makes through a financial entity, a tax that will discourage savings and motivate people to use cash.

Thursday, September 17, 2020

In order to discuss a medium and long term credit with the International Monetary Fund, the Costa Rican authorities would be planning to design and create a new tax, which consists of each person paying a tax of ¢3 for every ¢1.000 in the transactions they make through a bank, finance company, mutual fund, stock exchange or any other financial entity.

See "Financial Services: Business Potential in Central America"

After learning of the government's intentions, the Costa Rican Banking Association (ABC) has expressed its rejection of the proposal, since this type of collection will encourage unbanking in the country.

Mario Gomez, legal advisor to ABC, told Elobservador.cr that "... The banks recognize the serious situation the country is going through and have made great efforts to support the most affected sectors, but it seems to us that this tax, in which the financial entities would be collectors, has negative implications for all clients, regardless of whether they are individuals or companies. Moreover, it would come in the midst of a very difficult situation, a product of the crisis generated by the COVID-19 and the country's fiscal situation."

According to the banking union, with these collections people and companies would learn to avoid paying the tax, generating capital flight to offshore accounts and leading to growth in the informal sector.

Gomez added that "... a new tax in the current situation is undoubtedly a blow to Costa Ricans and a setback in the process of banking penetration that financial institutions have promoted for years."

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More on this topic

More Taxes, Again the Easy Way

September 2020

In order to access the $1.75 billion credit requested from the IMF, the Costa Rican government proposes to tax financial transactions, increase the tax on the profits of companies and individuals, and increase the tax on real estate.

On the afternoon of September 17, and in the context of a severe economic crisis that had been going on since before the beginning of the pandemic, the Alvarado administration presented the plan with which it intends to mitigate the fiscal impact of the Covid-19 crisis, a proposal to negotiate an agreement with the International Monetary Fund (IMF) to obtain a credit of $1.75 billion.

Costa Rica: Restrictions on Banking Transactions

March 2017

Companies that make or receive international transfers for amounts of over $50,000 per transaction will have to indicate the origin of the funds.

Banking entities have reached an agreement to amend the Self-Regulation Rules for Monitoring of International Transfers to Prevent Money Laundering and Terrorist Financing. The amendment was approved in October 2016, and banks will have to start  implementing the new measures in January this year.

Costa Rica: Bank Account Numbers to be Updated

March 2016

17-digit customer account numbers will be replaced with a global code which will facilitate international transactions and interbank deposits.

Business customers and financial institutions must prepare for the change to the National Payments System announced by the Central Bank of Costa Rica.

Costa Rica: Banks Facing Tax Reform

April 2015

In its comments on the bill on income tax and sales reforms currently under public consultation, a request has been made that financial institutions be subject to a system of global and not published income.

From a statement issued by the Costa Rican Banking Association (ABC):

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