Tourism: Disadvantages of VAT Payment

The VAT that will be gradually collected in Costa Rica over four years would put tourism businesses in a disadvantageous position, since they will have to increase product prices or reduce their profits.

Wednesday, March 27, 2019

The implementation of Value Added Tax (VAT) will be done gradually, from 0% in the first year, 4% in the second year, 8% in the third year and 13% from the fourth year, a situation that would make the operation of tourism companies more expensive.

See "Gradual VAT for Tourism Activities"

For Germán Morales, partner of the consulting firm Grant Thornton, "... because it is a highly competitive market, assuming the cost or transferring it to the client can put companies at a disadvantage."

Shirley Calvo, executive director of the National Chamber of Tourism (Canatur), told that "... the graduated application of VAT came from the fact that many services are marketed up to two years in advance. In this way we sought to moderate the impact on the cash flow of companies that operate like this: travel agencies, wholesalers or corporate sales."

To make the graduated collection companies must register with the Costa Rican Tourism Institute. Those that do not, must apply the 13% charge from the beginning.

Although there are doubts regarding how the tax payments will be applied, Canatur will wait for the last version of the regulation to be defined in order to make recommendations to the members.

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