Stock Market at a Disadvantage

The new tax reform proposal being discussed in Costa Rica raises capital gains tax from 8% to 15%, and also excludes recognising as a debt deposits made by issuers in the securities market.

Monday, August 20, 2018

In the view of the National Stock Exchange (BNV), not recognizing deposits made in the stock market as debt leaves it at a clear disadvantage, compared to banks, as a source of financing for companies. Not only does it compromise access to investors' savings, it also significantly limits companies and individuals investment options.

See: "The other side of the fiscal crisis"

The most recent version of the Bill to Strengthen Public Finances, establishes that income and capital gains will incur 15%, (the tax is currently 8%), and additionally, it excludes the recognition as debt of deposits made by issuers in the securities market. According to José Rafael Brenes, general director of the BNV, "... this omission creates a disparity between financing via banks, versus financing through the Stock Exchange.

"... For Brenes, the disparate position in which the stock market is placed urgently needs to be reviewed. 'Respectfully, we ask the ladies and gentlemen to analyze these points carefully, to avoid the costs of taxes being transferred to interest rates, and on the other hand, to prevent the stock market from being left at such a disadvantage that it becomes useless as a financing option for productive projects'."  

In a statement, the BNV added that "... Days ago, the stock market expressed concern about the format of proposed tax adjustments, which did not take into account the immediate impact on the financial system. Specifically, the possibility of gradual tax reforms was proposed, in such a way that time would be given to proposals in order to improve the economic dynamics resulting from them."

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