QCOSTARICA – Starting on March 1, the Ministry of Finance in Costa Rica (Ministerio de Hacienda) will charge sales tax on soft drinks at the distribution stage and not in the final bill to consumers.
With this measure, Hacienda aims to improve the control and revenue from the sale of soft drinks. For the consumer, soft drinks should not include sales tax at the time of purchase.
The General Department of Taxation (Administración Tributaria in Spanish) under the Ministry of Finance, believes that it is easier to collect from distributors, given the manufacture and distribution of soft drinks is concentrated in five major companies.
In contrast, more than 10.000 retailers sell these products, making it harder “the proper collection, monitoring and auditing” of the sales tax.
Hacienda says that many are small retailers are registered in the simplified taxation regime, “thus are not required to issue invoices,” said Pablo González, tax expert with ICS Abogados.
The measure also aims to harmonize taxation procedures for calculating the sales tax with a profit margin for the soft drinks which are imported and domestically produced, in order to be consistent with the principles of tax equity and national treatment, according to Hacienda.
Among the leading producers or importers and distributors of soft drinks in Costa Rica: FEMSA (Coca-Cola, Fanta, Sprite, Fresca, others), Florida Bebidas (Pepsi, Mirinda, 7UP, others), Ajecen del Sur (Big Cola and others).
The change implies that distributors and retails incur additional cost to make the change to the tax structure on these products.