Tax Reform Necessary

The tax system in Costa Rica is chaotic, complex, unfair, disproportionate, inequitable, and ineffective, which affects development and competitiveness, encouraging tax evasion and smuggling.

Tuesday, November 27, 2012

In an analysis piece in items, Danilo Villalta notes the need for comprehensive reform of the Costa Rican tax system, starting with a "strategic planning process" to approve a plan "agreed with the various political forces, and subsequently according to that plan, develop bills with the participation of specialists in order to have legislation that is clear, transparent, simple and easy to apply by the administrator and the taxpayer. "

Currently "some taxes border on the ridiculous, such as stamp duty for professional associations and other entities and, in some cases, the value of emission is greater than the value collected. Many others are fads, such as stamp duty for education and culture, the tax on corporations, the tax on casinos and taxes on fishing. "

Villalta remarks that "The tax system that is adopted should consist of a few taxes, at reasonably low rates. It should establish specific and periodic declarations to the Government, with a high level of control at low cost, and achieve a high level of collection with evasion being at a minimum. "

More on this topic

Costa Rica: VAT Increase from 13% to 15%

November 2014

A bill that the government plans to introduce in the Assembly before the end of year includes transforming the sales tax and into a value added tax and gradually raising the rate from 13% to 15%.

This increase should be available within two years in order to "... stabilize the size of the gap between government debt and gross domestic product (GDP) from 2019 and safeguard macroeconomic stability. "

New Tax Law in Effect in Honduras

January 2014

The recently published new legislation establishes an increase of 12% to 15% in sales tax.

The Law on Ordering Public Finance, Control of Exemptions and Antievasion Measures includes 72 foods which had been excluded from payment of Sales Tax (ISV by its initials in Spanish) among which are ribs of beef, pork, chicken, natural cows milk, pasteurized milk, whole milk powder, butter and others.

Tax Review of Basic Food Products

May 2012

Costa Rica's government has amended a decree issued last week which levies with a tax of 13% products like wheat flour bread, milk and packaged beans .

Besides the aforementioned products, others that remain exempt from the 13% Sales Tax (IV in Spanish) include tinned tuna, with or without vegetables, sausages packed in sealed plastic, and cheese packaged in sealed plastic without any degree of maturation.

Tax Exemption Ends for 90 Products

May 2012

Due to the government’s need to increase tax revenue in Costa Rica several types of meat and fruit will incur sales tax of 13% from Monday .

Among the types of products that will be taxed from now on with 13% sales tax are beef and pork loins, beef tenderloin and pork t-bone, Delmonico, sirloin, salmon, rice paella, risotto, shrimp, lobster, oysters, kiwi, plums, prunes, cherries and peaches, reports

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