COSTA RICA NEWS — The Ministerio de Hacienda (Ministry of Finance) has postponed until December 1 the start of the 2% retention by financial institutions on all card transactions.
Deputy Ministry of Finance, Fernando Rodríguez, confirmed the extention from November 1 to December 1, giving banks more time to adapt their systems and make adjustments seeing as they are the entities that must make the retentions.
Rodriguez, told Nacion.com that “… it is already decided, we have even communicated it to the banking sector, to the Costa Rican Banking Association of Banks and the House this week, so that they, in turn, can notify their partners. ”
“… When a person is pays with a card in a store, from the payment a 13% sales tax is deducted and from what is left 2% is subtracted as advance payment of tax on income, or 1.77% of the percentage of the total purchase amount.”
The retention appeared a resolution DGT-R-036-2014, published in La Gaceta on August 25 and to have gone in effect on October 1.
Source: La Nacion
Ok, another funny law, linking sales to income tax; basically because the govt. is failing to collect income tax from many Ticos. What happens to those of us (like foreigners) who do not pay or file income tax? What is the plan to return this 1.7% ?
I doubt the govt. has thought of how to do that. If they need more sales tax, why not just increase it? Seems to me far better to hire more tax enforcement personnel and tax the professionals, or businesses, who may not pay any tax at all.
Don Bosque, to be clear, the up to 2% (the law allows for lower retention) is on the retailer and not the consumer. The concept is that the retailer would get 2% less on his remittances from the bank, which is sen to the tax department in advance of calculating income tax return for the year.
Everything should work well if the business has a taxable income. But, what if the business doesn’t? This is where things get complicated.
A good friend always tells me, “Costa Rica, the land of everything simple is made complicated.”