COSTA RICA NEWS – The 1.78% holdback to retailers on credit and debit transactions, was suspended by the Tribunal Contencioso Administrativo (Administrative Court) Friday afternoon.

The Dirección General de Tributación, tax department of the Ministeio de Hacienda (Ministry of Finance) announced last August that beginning on October 1, and later changed to December 1, 2014, all transactions with a credit and debit card would be subject to a holdback, as an early payment of income tax by the business.

The suspension follows the Court’s granting an injunction filed by the Unión Costarricense de Cámaras y Asociaciones de la Empresa Privada (Uccaep) – Costa Rican Union of Chambers and Associations of Private Enterprise.

The Court gave the Ministry of Finance three business days to provide arguments in favour of the measure (withholding), explained Allan Saborío of Deloitte.

In the original announcement, the withholding was 2% and covered every transaction when a credit or debit card was used. But, following the complaint of some sectors, the holdback has dropped to 1.78%.

In addition, it was announced that grocery stores, restaurants, taxis (that accept credit or debit card) and gasoline retailers would be exempt from the holdback. Hacienda also clarified that services were also exempt.

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