Entrepreneurs in Costa Rica are warning of the negative impact of not maintaining, in the new law of public finances, the VAT exemption on local purchases of goods and services carried out by free zone companies.
The Association of Free Trade Zone Companies of Costa Rica (Azofras) points out that in the bill to strengthen public finances that is being discussed in the Assembly, motion 302 was not revised, a motion which aims to keep the VAT exemption on the local purchases of goods and services carried out by free zone companies, both to be incorporated into export products and for their operations.Currently the sales tax exemption applies.
A bill that is being discussed in the Legislative Assembly proposes establishing a tax of 5% on the net sale price of imported or locally produced cement.
The bill establishes that "...the tax on cement produced within the national territory or imported, will be of five percent (5%) on the net sale price, both in the case of the national producer at the level of the production plantand for the importer at the level of the dispatch or storage site, excluding the corresponding sales or value-added tax, as well as any other tax".
In Costa Rica, the new proposal from the Solis administration's imposes tax on a greater amount of goods and services, such as air tickets, books, packaging and bottling, but with differentiated rates.
As the government's initial idea to convert the sales tax into a value-added tax and raise it from 13% to 15% did not prosper, the Ministry of Finance decided to expand the range of goods and services to be taxed, in order to compensate part of the funds that could not be raised from raising the rate from 13% to 15%.
A bill being prepared by the hotel union would force platforms such as Airbnb to pay 13% sales tax and an additional 5% for national parks.
The bill is being drafted by the National Chamber of Tourism, which intends to submit it to the Legislative Assembly.If passed, this law would take effect for all platforms used for renting accommodation for tourism purposes, such as Airbnb, Homeaway and others.
Protests have been made in Costa Rica over the Treasury's intention to charge sales tax on services provided in recreation centers, contravening a ruling made by the Administrative Court in 2015.
The National Chamber of Tourism said that three companies in La Fortuna de San Carlos received notification from the Directorate General of Taxation which indicated that they were required to pay sales tax of 13% on recreational services offered to tourists.
The new law against tax fraud obliges anyone renting houses and flats for less than 30 days to register and pay sales and income taxes.
Services of renting houses, apartments and condominiums for periods less of than one month must pay sales and income taxes, and those who carry out such activities must register as taxpayers of the two taxes, in order to not be subject to fines.
The bill against tax fraud authorizes the Ministry of Finance to return up to 1% of sales tax paid by final consumers.
The return of that percentage, which would be a maximum of 1% of the general sales tax, would be subject to ranges and types of trading activity, as explained in the Bill to improve the fight against tax fraud.
The food industry is opposed to the executive decree which eliminates the exemption from payment of sales tax on some food products.
From a statement issued by the Costa Rican Chamber of Food Industry (CACIA):
The CACIA sent a note to the Finance Minister protesting against the publication in July this year, of Executive Decree 39732-H, which introduces changes to the regulations to the law on sales tax.It eliminates the definition of "canned" or "packaged" food which in the previous Decree referred to products which were canned or packaged in glass products.This change can affect exemptions applied to some products such as cheese, coffee, sausages, some seafood and corn.
A ruling by the Administrative Court prevents the Treasury from levying sales tax on tourism activities carried out in protected areas.
Activities such as rafting and canopy tours carried out in protected areas remain off the list of taxable activities for sales tax, according to a ruling by the Administrative Court, in response to a lawsuit filed by the National Chamber of Tourism in 2014.
The union of builders has warned that the proposed sales and income tax increases will make costs of services and supplies more expensive, raising the cost of building a home by 12%.
From a statement issued by the Costa Rican Chamber of Construction (CCC):
Families that want to build a house will have to pay about 12% more for it, with the proposed changes.
Under public consultation is a draft procedure for the payment of tariffs on imported materials and payment of sales tax and selective consumption tax for the final goods.
In the application of Article 21 of the Free Zones Act and 136 of the Rules which provide that companies classified as processing industries that process or assemble exported goods, whether or not and they meet the requirements of Article 21 of the Free Zones Act, pay tariffs on goods subject to local sales only on imported materials used in both the payment of the remaining taxes (Excise Tax consumption and sales) are paid on the final good; the draft procedure is available at the website www.hacienda.go.cr/contenido/12512-propuestas-en-consulta-pública under the name "Process Sale Estate category f) for public consultation", for the purpose of allowing the submission of comments, within 10 working days, using the following email addresses: ulloaaj@hacienda.go.cr, garrozs@hacienda.go.cr.
The Ministry of Finance has postponed until April 17 the deadline for companies to make their comments on the draft legislation reforming income and sales taxes .
Originally the deadline for providing comments on the tax proposal was March 27, but at the request of several sectors it has been extended until April 17, according to the chief of Finance, Helio Fallas.
Starting in March the Ministry of Finance in Costa Rica will charge sales tax on soft drinks at the distribution stage and not in the final bill to consumers.
In an appeal to the facility to define at what point in the marketing chain sales tax is levied, the General Department of Taxation has announced that starting from March, sales tax paid on soda drinks will be charged on the distribution of product.
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