COSTA RICA NEWS – Finance Minister, Helio Fallas, confirmed that after meeting with the president of the Institutio Costarricense de Turismo (ICT), Wilhelm von Breymann, they agreed to sit down next week and negotiate with the tourism sector, but for the time being the sale tax stays and is important, in a small way, to the State’s finances.

original-28994-1407286773-9The reference to the tax is the 13% sales tax on the vacataion rental properties. The Finance ministry two weeks ago clarified that any rental of a property for less than 30 days, rented to tourists, must charge and remit the 13% sales tax.

Fallas said there is law that Hacienda (Ministry of Finance) has to respect. “The decision (to implement the sales tax) was taken in accordance wtih a legal analysis made by the Directorate General of Taxation and tha main reason for its application is the high fiscal deficit,” said Fallas.

The minister added that the Ministry of Finance is not political, that though there is a minister (a politician), there is a law and  its application is defined by the Directorate General of Taxation, decisions the minister may not influence.

At the meeting between von Breymann and Fallas was also present the ministro de la Presidencia, Melvin Jiménez.

The Cámara Nacional de Turismo (Canatur) and the Cámara de Hoteles de Costa Rica (chamber of hotel operators) have been asking the government to hold off collections on the sales tax for at least ten days while they work out the problem.

From the point of view of the Canatur, the measure (sales tax) would cause of paralysis in the sector, increase informality (under the table rentals), a break in the production chain and the downsizing, even closure, of some businesses.

Pablo Heriberto Abarca, the head of the tourism chamber, suggests that the tax authority must consider whether the measure will generate the expected revenues or to the contrary, have a negative effect on the main engine (tourism) that drives the Costa Rican economy.