Despite a severe economic crisis, Costa Rican authorities have approved the imposition of a 1% VAT on several foodstuffs in the basic food basket, and 4% on certain tourist activities and construction services.
Before the emergence of the pandemic, the Costa Rican economy was already in a difficult state, and the impact of the covid-19 outbreak ended up hitting it in the worst way, which is evident in the performance of productive activity.
Since October 1, Costa Rican producers and suppliers in the agricultural and fishing sector have a special regime for declaring and paying VAT, which provides that coffee producers, sugarcane and beekeepers will make an annual declaration.
The new Special Agricultural Regime (REA) does not change fiscal obligations, but it allows them to be adapted to the particularities of production processes, so as to facilitate compliance, informed the authorities.
Although Costa Rica and Nicaragua approved fiscal reforms this year, it is predicted that the expected results in terms of tax collection will not be achieved.
The document "Centroamérica: análisis sintético, por país, del desempeño de la recaudación tributaria en 2019", prepared by the Instituto Centroamericano de Estudios Fiscales (Icefi), explains that, in the case of Costa Rica and Nicaragua, the expected results in terms of improved collection are still in doubt.
Until April 26 will be in public consultation the regulations of the Income Tax Law in Costa Rica.
From the Ministry of Finance statement:
April 12, 2019. As was done with the first proposal of the regulation to the Law of Value Added Tax (VAT), the Ministry of Finance made available on its website, the first draft of the project "Modifications and Additions to the Income Tax Law Regulation", which regulates Title II of the Law to Strengthen Finance, No. 9635, of December 3, 2018.
Regulations of the Value Added Tax Law in Costa Rica are in public consultation until February 4.
From the Ministry of Finance press release:
January 29, 2019. With the aim of achieving the greatest possible citizen participation in the implementation process of the Law to Strengthen Public Finances, from today, Tuesday, January 29 and until next Monday, February 4, the Ministry of Finance will have available to the public the proposed "Regulation of Title 1 of Law No. 9635 of December 3, 2018, called "Value Added Tax Law" (VAT).
On December 5th, will begin the period in which the taxpayers who pay their debts in the first three months after the publication of the Law will be absolved of arrears and sanctions.
The publication of the Law to Strengthen Public Finances in the official newspaper La Gaceta marks the beginning of the three-month period for taxpayers with debts to the Ministry of Finance, the Instituto Mixto de Ayuda Social (Imas), the Instituto de Fomento y Asesoría Municipal (Imas) and the Instituto de Desarrollo Rural (Inder) to update their accounts without charging interest and penalties.
The tax reform law that would be approved in second debate in the coming weeks, involves the exoneration of arrears and penalties for taxpayers who pay their debts in the first three months after the publication of the law.
The proposed measure consists of exonerating 100% of the interest on arrears and up to 80% of the penalty to taxpayers who pay in the first month after the Law is published in the official newspaper La Gaceta.
The proposal to increase the tax on interest on financial investments in Costa Rica could eventually make credit more expensive for both the private sector and the government.
In the view of the National Securities Exchange (BNV) it is worrisome that initiatives such as an increase in tax on income from financial investments are being discussed without knowing in detail and clearly the impact that something like this could have on the stock market and the country's financial activities.
The good functioning of the institution in charge of collecting taxes is vital for ensuring economic development, as it means that honest companies who comply with their fiscal obligations are not at a disadvantage to those who don't.
EDITORIAL
In Costa Rica, better administrative management has made possible better income tax collection figures than those foreseen with simple tax increases.
The OECD has given an overall grade of "largely fulfilled" but noted that there is no consolidated record to document all of the trusts created and the funds managed using this process.
From a statement issued by the Ministry of Finance in Costa Rica:
"Partially met" is the description given by the Organization for Economic Cooperation and Development (OECD) of work undertaken by the country to meet international standards set by the Organization on transparency and exchange of tax information.
If the Treasury's proposal succeeds, interest on bank deposits would incur 8% to 15%, while for revenues generated by mutual funds, the tax would rise from 5% to 15%.
This unification is due to the fact that currently there are different taxes for similar types of income, therefore the tax is not neutral, according to the CEO of Taxation. In the case of surplus cooperatives and solidarity associations, the project proposes "...
Requests have been made for the clarification of which telecommunications services are to be taxed with VAT, since it is unclear whether it is information services or telecommunications which would be taxed.
Currently telecommunications services are charged sales tax, even though the Costa Rican government aims to close the digital divide. With this new reform proposal, a Value Added Tax (VAT) of 15%, "would be incurred ...
Limiting the deduction of interest from income tax and eliminating the exemption from payment of 15% for dividend distribution between companies are part of the changes included in the project.
The Bill to Improve Anti-Tax Fraud, presented by the Ministry of Finance amends various tax issues that must be taken into consideration by companies operating under Costa Rican law.
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.