The union of restaurants in the country argues that tipping does not count as part of their profits and are asking for them to be exempt from the 2% retained on card payments by way of advance payment of income.
At the moment the Ministry of Finance is evaluating the request by the Costa Rican Chamber of Restaurants, since according to representatives of this guild more is retained from them than from other stores.
The Ministry of Finance has announced that tour operators and travel agencies are not subject to the 2% deduction relating to advanced income tax payment on credit card transactions.
From a statement issued by the Presidency of the Republic of Costa Rica:
The Ministry of Finance today reported that at the request of the representatives of the tourism industry, the General Department of Taxation review the status of tour operators and travel agencies and exclude them from withholding money, on the grounds that these two activities in the tourism sector supported the request with their technical studies which were reviewed by the Tax Administration Office. This exclusion does not include the hotel industry.
An injunction which since November suspended retention of 2% as an advance payment for tax on card transactions, has been declaration void.
The General Department of Taxation, at the Ministry of Finance announced that the measure will be effective immediately. "... The retention will be applied on 88% of the amount of each transaction, so effectively the amount withheld is 1.78%. "
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 "...
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.