One Step Closer to a Tax Reform

The Costa Rican Congress has approved a fast track bill that would transform sales tax into a VAT of 13% and establish a 4% rate on the purchase of packaging, wrapping and raw materials, among other things.

Thursday, March 1, 2018

The bill that could be approved by the Legislative Assembly also includes "... taxes on books in all their formats, air tickets, purchase of packaging and raw materials, as well as equipment and machinery (except if there is an express exoneration) and services for agricultural and agroindustrial production."

See "Costa Rica: More Warnings Over Fiscal Deficit"

The initiative also contemplates charging a 15% tax on capital gains. The 13% Value Added Tax would be levied on the other assets, with some exceptions and maintaining the exonerations in force.

See also: "Juggling public finances"

Nacion.com reports that "...The plan also proposes establishing a ceiling of ¢5.4 million on the salaries of public officials and the heads of State Powers and Public Administrators. The equivalent of 18 minimum monthly salaries for the lowest income category in the private sector."

More on this topic

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As in old fashioned patriarchal homes, if there must be suffering, the first to suffer are the stepchildren, and only afterwards, if necessary, the legitimate children.

EDITORIAL

The announcement by the Solis administration that it has a plan B in case it does not manage to get legislative approval for the proposed tax increases designed to address the serious and growing fiscal deficit, highlights the existence in Costa Rica of first class citizens and second class citizens.

IMF: Salvadoran Government Must Reduce Expenses

June 2014

If there are no reductions in state subsidies and wages no type of fiscal reform will allow the country to achieve sustainability.

Since 2013 and via an Article IV report for El Salvador, the International Monetary Fund (IMF) has been warning the government about the need to take action to moderate wages in the public sector and correct poorly targeted subsidies, establishing strict controls over costs, which for the current year increased by $281 million.

Costa Rica Prepares New Tax Measures

April 2012

In light of the failure of the first draft of the tax reform, the Government has announced more taxes, the end of exemptions on luxury goods and tax on remitted abroad.

After the defeat of the so-called 'Solidarity Tax Act' in the country's Supreme Court, the Government has been forced to re-do their fiscal and tax plans and launch a new legal package in Parliament.

Progress on Approval of Tax Reform in Costa Rica

November 2011

After being approved by the Special Commission, the bill has moved on to the legislative plenary discussion.

The project aims to reduce the fiscal deficit, which currently stands at 3.2% of gross domestic product, and could be approved by the plenary of the Legislative Assembly before the end of the year.

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