¿Will There Be A Light At the End of the Fiscal Reform Tunnel in Costa Rica?

Experts warn that the draft law which aims to raise income tax and convert sales tax into value added tax might not be approved for two years.

Tuesday, April 7, 2015

The lack of consensus between the Ministry of Finance and the President of the Republic, Luis Guillermo Solis, is sending mixed signals on some aspects of the tax reform. One example in the case of corporation tax, an issue that the president himself has stated he disagrees with. In the opinion of economist Thelmo Vargas, it denotes that "... There is no agreement on the proposal". Added to this is a fragmented legislative assembly where the ruling party does not have a majority.

The economist Vargas told Crhoy.com that "... While we know that there has been better management of expenditure in recent months, problems remain with the triggers: wages, pensions and transfers, and debt servicing, whose amounts have continued to grow and because of this we are not in agreement with having new taxes until those decisions have been taken."

He added that "... 'I think there is a lot of opposition from political parties over approval of new taxes, because there is no plan to control spending. This will involve a lengthy discussion and we see no approval within two years'. "

More on this topic

Pressure to Repeal Tax Measures

January 2020

With the Nicaraguan authorities confirming that they will review the Tax Agreement Law again in 2020, the business sector is calling for the correction of several measures that have decapitalized companies operating in the country.

On February 27, 2019, the reform to the Tax Harmonization Law was approved, which consisted in raising income tax from 1% to 2% for medium sized companies with higher income, and from 1% to 3% for large taxpayers.

Tax Reform: First Step

December 2018

Alvarado administration celebrates the approval of the tax reform in Costa Rica by announcing a series of initiatives that include, among other things, a public employment reform Project.

After a year of proceedings in Congress and after having been reviewed by a Constitutional Chamber, the country's Assembly finally approved file 20.580.

Costa Rica: Tax Exemptions Revised

February 2015

As part of a plan to reduce the fiscal deficit, the Finance Ministry is preparing a bill which aims to amend the existing tax exemptions scheme.

This project also seeks to create penalties for 1,259 misuse of tax breaks reported by the Technical Services Department up until 2014. It is anticipated that the initiative will be submitted to the Legislature in no more than two weeks.

Nicaragua: Tax Increase for Non-resident Investors

December 2014

With the reform to the law on Tax Concentration non-resident investors in the country will have to pay 15% instead of 10% on income earned from capital.

According to Juan Sebastian Chamorro, executive director of the Nicaraguan Foundation for Economic and Social Development, the new reform "...

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