The business sector welcomes the progress achieved with the tax reform approval in the first debate, but notes that it does not fully solve the financial problems facing the government.
In the debate last Friday, the representatives approved the file number 20.580, known as the tax reform law. The approval was optimistically received by the Costa Rican Union of Chambers and Associations of Private Business Sector (Uccaep). However, they affirm that several adjustments should be made to public spending to achieve long-term solutions.
The Legislative Assembly has approved the absorption of Bancredito by Banco de Costa Rica, which must take on both the entity's assets and its obligations.
Food companies in Costa Rica say that eliminating VAT from the basic basket in the tax reform proposal would create an incentive for imported foods, over and above local production.
The Costa Rican Chamber of the Food Industry (Cacia) reacted to the decision of the deputies to exempt VAT of 1% and 2% on the products of the basic basket in the Bill of Strengthening of Public Finances, which is being discussed in the Assembly.
Leaving out VAT on private education and the basic basket, the substitute text of the bill to Strengthen Public Finances was approved in the legislative committee.
The controversial substitute text of the Bill Strengthening Public Finance that has already passed the first filter, and may now be analyzed by the Plenary of the Assembly, left out two of the taxes that the Alvarado administration intended to implement in its plan: VAT of 1% and 2% on products in the basic basket and 2% on private education services.
The Congress of Costa Rica has finally approved a $500 million loan for the state electricity company to carry out electric generation and transmission works, including three geothermal plants.
Of the total amount of the loan with the Inter-American Development Bank (IDB) approved by the Legislative Assembly, close to $200 million will be used to finance the Pailas II, 50 MW, and Borinquen I, 55 MW geothermal projects, both in Liberia, Guanacaste.
Agricultural machinery and equipment, retreads and tires for machinery could be exempt from 13% VAT, if the substitute text of tax reform that is being discussed in the Legislative Assembly is approved.
The same exoneration would apply to books in all their formats, which in the original bill presented by the government had a differentiated rate of 4%.
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".
The Costa Rican Congress has approved a fast track bill that would transform sales tax into a VAT of 13% and establish a 4% rate on the purchase of packaging, wrapping and raw materials, among other things.
The bill that could be approved by the Legislative Assembly also includes "... taxes on books in all their formats, air tickets, purchase of packaging and raw materials, as well as equipment and machinery (except if there is an express exoneration) and services for agricultural and agroindustrial production."
With the law approved by the Legislative Assembly of Costa Rica, electric vehicles are exempt from the general sales tax, the selective consumption tax and the customs value tax.
Finally, the Legislative Assembly has approved, in a second debate, the Law on incentives and promotion of electric transport, which aims to encourage the purchase of these types of cars in the country.
In the Legislative Assembly a bill is being discussed that would allow for hiring done by government entities not to require the endorsement of the Comptroller General of the Republic.
Bill 20.202 is an initiative of the General Comptroller of the Republic, which put forward a proposal with the aim of reducing the time and the bureaucracy involved in the review and subsequent endorsement of each contract.
The bill which the Legislative Assembly approved in a first debate establishes tax exemptions for imports of electric vehicles and authorizes the replacement of the vehicle fleet belonging to State entities.
Nacion.com reports that "...Specifically, the bill authorizes the State not to charge taxes on fully electric vehicles costing less than $30,000 (¢17.4 million)."
In Costa Rica, a bill under analysis in Congress would force industrialists to contribute to the National Rice Corporation with an additional 5% of the value of the rice purchased under import schemes due to shortages.
Although the aim of the two bills that are being discussed in the assembly is to comply with a resolution of from the Sala IV (4th Court) which ordered consumers to be incorporated into the board of directors of Conarroz, it was also used to modify in the law texts other aspects to which industrialists are opposed.
The Congress has approved in a first debate a new law on the management of water resources, after having declared a law unconstitutional in 2014 following its approval that same year.
One of the main differences of this new bill with the one from 2014 is the elimination of the articles that refer to hydrological unit councils, whose original purpose was to supervise the application of the law.
Finally, the Congress in Costa Rica will discuss a bill that proposes the exploration and exploitation of geothermal energy in national park lands.
Studies carried out by the Costa Rican Institute of Electricity (ICE) estimate potential geothermal energy generation in the country at 875 MW, where current installed capacity is 195 MW.
Once enacted, the newly approved law will force accountants, lawyers, realtors, and other professionals to report suspicious transactions made by their clients.
Bill 19.951 reforming the Law on Narcotic Drugs, Psychotropic Substances, Drugs of Unauthorized Use, Related Activities, Legalization of Capital and Financing of Terrorism was approved in a second debate by the Legislative Assembly.
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