Tourism: Investment Falls and Incentives are Reduced

In the context of a considerable fall in foreign investment in the sector in Costa Rica, the situation could be further complicated by the elimination of tax incentives that tax reform is bringing along.

Thursday, May 30, 2019

Figures from the Central Bank of Costa Rica (BCCR) detail that after reporting $443 million in foreign direct investment in tourism in 2017, this figure decreased dramatically last year, registering only $23 million.

Although this considerable decrease is because of the fact that during 2017 the peak of investments was especially due to the registration of four large projects, the $23 million reported in 2018 is the lowest amount since 2009.

You may be interested in "Tourism and Travel: Consumer Interests and Preferences

Flora Ayub, executive director of the Costa Rican Chamber of Hotels (CCH), explained to Nacion.com that "... there is indeed concern about the decline in tourism FDI, and that they were called to participate in a commission to address the case and expect the strategy that Cinde will employ to reactivate the attraction of investors. That strategy would be presented at the end of June."

In addition to this situation, with the application of the Value Added Tax (VAT), which will come into effect on July 1, all exemptions that are not specified in the Law to Strengthen Public Finances were eliminated, which will lead to the tacit repeal of tourism incentives created by Law 6990.

Also see "Tourism in Costa Rica: Lights and Shadows

Sary Valverde, president of Canatur, told Elobservadorcr.com that "... the government has had no rapprochement with them and has given brief answers to their questions. In the tourism sector, many of the businesses are entrepreneurs, which would increase the degree of affectation."

Valverde added that "... This is something that we didn't measure at the time the law came out. Really if the tourist incentives disappear there are hotels that are going to have to close as a result of this, which would directly affect unemployment.

See Nacion.com article "Turismo sufre fuerte volatilidad en inversión extranjera" and Elobservadorcr.com article "Industria turística teme que eliminación de incentivos provoque cierre de negocios".

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