Costa Rica rating downgrade spurs VAT reform

Sat 27th Sep 2014

Costa Rica is to join the growing number of countries seeking to stablise their government deficits through the introduction of a modern Value Added Tax regime.

The movement to overhaul the current 13% simple sales tax has come following a downgrade of the economies credit rating by Moodys. It slipped from BB1 to BAA3. Moody’s noted the political difficulties on agreeing on a new VAT regime as one of the reasons for the downgrade.

It is estimated that the VAT reform could generate over $0.5 billion, and help reduce sales tax fraud.