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.
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.
In Nicaragua, there is uncertainty because the government is reviewing the tax reform without the participation of businessmen, and because adjustments to the minimum wage could be made in September.
Weeks ago, it was reported that when the government's review of the tax reform in force in the country since February is completed, businessmen consider that no tax cuts will be made, despite the fact that production costs in the country have risen considerably.
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.
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 ...
Despite several announcements of new taxes, the government will focus on controlling tax evasion and leave the decision to implement a tax reform to future administrations.
According to authorities at the Ministry of Finance, at the moment there is no consensus for fiscal reform. The priority now will be to pursue and strengthen tax administration in order to meet budget expenditures this year.
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 "... is a positive thing for the country because it will generate an increase in the collection of such taxes but is a negative blow to natural and legal non residents because the Revenue Department will no longer deduct 10% on capital transfers, but rather 15 %. "
The argument is that the tax on cement will increase the cost of housing by at least 6% and the tax on phones will directly affect users of prepaid telephone lines.
From a statement issued by the Chamber of Industry of Guatemala:
The Chamber of Industry of Guatemala emphasizes that even though it promptly denounced the risk of lack of transparency and accountability of the state budget for Fiscal Year 2015, it has been approved and will lead to negative impacts on the population.
In order to finance the 2015 budget, Congress has approved a tax of $0.65 for the distribution of each sack of cement weighing 42.5 kg and the same amount for each mobile or fixed telephone line.
Between the two taxes it is hoped that a total of approximately $2,607 million will be raised to finance the General Budget of the Nation in 2015.
In the case of taxes on mobiles and fixed telephone lines, "...
Congress has passed the elimination of the provision that payments be made by natural and legal persons when they are shareholders in corporate groups.
According to the liberal congresswoman Gabriela Núñez "... The law is properly applied to individuals who receive dividends as when they receive a profit they must pay their taxes; however, when it relates to a company it becomes a double taxation because the company, when it receives dividends, pays the tax and then when it distributes the dividends among its own shareholders, it once again incurs a tax liability of 10%, which is considered prohibited in the Tax Code. "
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.