Retention of 1.77% on card payments, as advance income tax, was scheduled to take effect on December 1, but has been suspended by a court order.
From a statement from the Chamber of Commerce of Costa Rica reads:
The Chamber of Commerce of Costa Rica has received the decision of the Administrative Court which puts a halt to the entry into force of the retention of 2% of transactions made using credit or debit cards, a measure that would principally affect companies in the commercial sector.
Bankers and businessmen are pressuring the government to remove the guideline which aims to retain 1.77% of each transaction as advance payment of income tax, scheduled to start on December 1.
The private sector argues that "...The decision of the Directorate General of Taxation (DGT) ignores the fact that neither card issuers nor financial institutions in the country can be considered as 'withholding agents' as this must be defined by the appropriate Act. "
The Ministry of Finance has postponed until December 1 the beggining of the 2% tax which will be retained by financial institutions on card transactions.
The aim of this extension is to give banks more time to adapt their systems and make adjustments seeing as they are the entities that must make the retentions.
Deputy Minister of Finance, Fernando Rodriguez, told Nacion.com that "...
Up to July 31st 2014 the number of cards in circulation amounted to 1,817,845, 5% more than at the end of April of the same year.
From a press release issued by the Ministry of Economy and Finance in Costa Rica (MEIC):
San Jose 03 September 2014. The third quarterly survey of credit cards up to July 31 shows that there are 28 issuers, 394 types of cards, 1,817,845 cards (plastic) in circulation, representing an increase of 86,172 cards from the previous study (5 %) as well as a balance of effective debt of 836,118 million colones (up 3.1% over the balance of 30 April).
Businesses will receive 2% less from the banks for payments made by customers using credit and debit cards, by way of advance payment of income tax.
A decision by the Directorate General of Taxation, published in La Gaceta says that banks must start making a deduction of 2% of the amount which corresponds to the business on card payments received from October 1.
A A bill presented in Costa Rica aims to improve tax controls by forcing merchants to accept payments with credit and debit cards.
The bill introduced in the Legislature by the Ministry of Finance, entitled "An Act to improve the fight against fiscal fraud" includes other initiatives such as the imposition of a sales tax on property rentals of less than one month duration.
Up to April 30, 2014 the number of cards in circulation amounted to 1,764,609, 2% more than at the end of January of the same year.
From a press release issued by the Ministry of Economy, Industry and Trade of Costa Rica:
According to data from the latest survey by the Directorate of Economic and Market Research of the Ministry of Economy, Industry and Commerce (MEIC), defaults decreased by 3%, corresponding to a delay of payment over 90 days, compared to the previous study.
As of January 31st 2014 the number of cards in circulation amounted to 1,729,945.
From a press release issued by the Ministry of Economy and Trade:
In the past 18 months, Costa Ricans in total increased the debt balance of their credit cards by on average 1% per month, the equivalent of more than $7.2 million every 30 days, as confirmed by the latest survey by the Directorate of Economic and Market Research at the Ministry of Economy, Industry and Commerce (MEIC).
At the end of October 2013 the number of cards in circulation amounted to 1,723,306.
A press release from the Ministry of Economy, Industry and Trade of Costa Rica reads:
Costa Ricans owe in total $1,496 million in balances on credit cards, which is an increase of $21.5 million (1.46%) compared to the latest study by the Directorate of Economic and Market Research, according to the cut made up to October 31, 2013.
The bank has acquired Corporación Servivalores' portfolio of balances from its Middle Payments Division, amounting to $27 million.
Both companies omitted the value of the transaction that took place last week. Furthermore, no definition has been given on the future of the employees of the division acquired by the bank, although it has made a commitment to keep the majority of workers.
Credit card debt grew by 1.5% to a total of $1.482 billion, while the number of cards in circulation up to July 31, 2013 was 1,731,673.
A press release from the Ministry of Economy, Industry and Trade of Costa Rica reads:
The Ministry of Economy, Industry and Commerce (MEIC) through the Department of Economic and Market Research has conducted its latest study on debit and credit cards.
The Board of the Central Bank says that any attempts to control prices and restrict competition will drive the informal economy.
Nacion.com reports that "The Government submitted, in late August, to the Legislative Assembly a Bill on Consumer Rights in relation to Usury in Credit Cards."
"... The initiative defines as usury loans rates which exceed twice the average of the last three months of the average lending rate of National Financial System, calculated by the Central Bank. Currently, the rate in colons is 15.88%, therefore that the cap would be of 31.76%. Anything over this would result in intervention by the Ministry of Economy, Industry and Commerce (MEIC) to regulate the market. "
A bill proposes to limit interests on all forms of credit, prohibiting setting interest rates unilaterally.
A press release from the Ministry of Economy, Industry and Trade of Costa Rica reads:
The President of the Republic, Laura Chinchilla Miranda, Vice President Luis Liberman and the Minister of Economy, Industry and Trade, Mayi Antillon Guerrero, today introduced a bill that seeks to establish limits to define credit usury, through the establishment of economic indicators that would be adjusted periodically.
A bill seeks to regulate the information provided by issuers to consumers, and another one sets caps on interest rates.
The first project proposed was by Congressman Luis Fishman, who suggests protecting consumers without affecting free competition among companies, obtaining a reduction in fees and costs.
"There must be regulation for all matters relating to the costs and burdens that are included on the cards, which in many cases are not duly explained to the customer, and contribute to the steady growth of debt and being in arrears" he said.
Between April 2012 and the same month this year, the credit card portfolio of state banks grew by 8.5%, while among private banks the increase was 33%.
The increase in the private sector is not surprising, since Banco Promerica alone has 35 types of credit card rates, being the issuer with the most diversity in the country. The dynamism is also reflected in income from fees which the banks charge for the use of plastic, accounting for 46% of total revenues.