A little more than a week after President Luis Guillermo Solis announced “a crisis of liquidity”, the government presented a bill called Law for Strengthening Public Finances that includes changes in Income Tax, creates Value Added Tax (VAT), and has a chapter on “Fiscal Responsibility” as well as one on Public Wages.
Regarding the Value Added Tax, the proposal taxes a series of goods and services that until now have not paid taxes such as private health services, private education and even internet television (such as Netflix).
However, it leaves a series of exceptions, such as churches of different religious denominations, unions and cooperatives.
None of the churches will pay taxes on the proceeds they collect or the payments they make for rental of premises to perform the service.
Neither will the National Horticultural Corporation, the National Banana Corporation, the National Rice Manufacturer Corporation, the National Livestock Corporation, the Costa Rican Coffee Institute, or the Industrial Sugar Cane League.
For a short time the services of engineering, architecture, topography and construction of civil works will not pay taxes. The exception applies to projects that, upon the entry into force of the Law and during the three months after the date, have plans duly endorsed by the respective municipality. They will be exempt from Value Added Tax during the first year of validity of the legislation.
Those who will pay taxes will be those companies or people who provide tourist services such as “rent a car”, tour guide, tourist transport, canopy, rafting and others, who will be exempt from the payment of VAT during the first year of validity of the law. The second year they will pay a 5% rate that will increase by five percentage points by the third year.
In addition, purchases of tangible and intangible goods and services through the internet or any other telecommunications platform will be taxed.