Costa Rica 13% VAT implementation
Costa Rica has published a plan to introduce a 13% VAT regime to replace its existing Sales Tax.
The current 13% sales tax is levied on imports and domestic sales of all goods. There are exemptions for basic foodstuffs, medicines and other essentials. Services are exempt. The country needs to widen its tax based, which means subjecting services to the new VAT – including the high-growth B2C digital services market. Although the full 13% on services may be phased in over a 4-year period. Services now accounts for almost half of the country’s economy.
The new draft law includes provision for a reduced VAT rate of up to 4% to cover education, public transport, healthcare, insurance, social hosing and other supplies. There would also be an exempt category of supplies, including air transport, low-cost housing, water and electricity.
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