Airbnb fears that the initiative that is making its way through the legislative process to regulate its operation in the country will hit its hosts and discourage them from using the platform in renting out rooms, apartment, villas and houses, that has become, for many Costa Rican families, a source of income.
The bill, which is about to begin its voting phase in the legislative floor, establishes the rules that non-traditional lodging companies such as Airbnb, Booking.com, Trip Advisor and others, that mediate between the owners and users who are looking for alternative to hotel accommodation.
Through the digital platform, the owners offer their property and services and the users reserve the option that suits them best.
The hosts accept payment for their rental or service. Currently, neither users nor hosts of these lodges pay taxes for this service; and hosts are not required to have permits or licenses.
However, that will all change if the bill that is being promoted by Pablo Heriberto Abarca, legislator for the Partido Unidad Social Cristiana (PUSC), is passed into law, as it would force hosts to register with the Instituto Costarricense de Turismo (ICT) – Costa Rican Tourism Board, as well collect and remit the Value Added Tax (VAT) on each transaction to the Ministerio de Hacienda (Treasury).
In addition, property owners (hosts) would have to take out a municipal permit (patente in Spanish), a cost that Airbnb considers excessively expensive, as they are being set to match hotel operators.
For example, the cost of the patente would be ¢44,620 (10% of a base salary – ¢ 446,200 – for 2019) for accommodations for up to 2 people. For up to five people, the rate would rise to 30%, that is, ¢133,860, while for more than six, it would be 80% (¢356,960).
The cost of the patente is annual and if not paid it the local municipality could shut down the host.
Carlos Muñoz, campaign manager, public policy and communications director for Airbnb Caribbean and Central America, said that the company is willing to collect the corresponding taxes and submit to regulations.
“It has been the same argument that we have always heard, that they want fair competition, versus a single mother in Liberia who rents a room in her home less than 30 days a year to generate some additional income. It cannot be that the same regulation is applied to that same single mother as to a businessman who owns a 400-room property,” said Muñoz.
Muñoz fears that the bill, if approved in its present text would later allow the government to create regulations that are too cumbersome, that discourage hosts.
“What I said to legislator (Abarca) is, why not have a bill in which the obligations are known up front, let’s talk and not leave to guessing to others on the obligations that must be complied with”.
“It seems to me that the bill is extremely broad, in the sense that it does not clearly define what the rules of the game will be for the community, and creates a lot of uncertainty in that regard,” said Muñoz.
Airbnb is not against licenses and fees. The company says it wants to see a law with more “sensible” rates, in accordance with the reality of the hosts using the platform.
“I understand that Costa Rica is going through a difficult economic situation, that the government is looking for opportunities for more Costa Ricans to benefit from tourism, directly as well. Why not look for legislation on which we can all agree?”, insisted Muñoz.
Airbnb by the numbers in Costa Rica
According to Airbnb, it currently has 24,600 accommodations in Costa Rica that have accepted reservations in the last 12 months, of which approximately 62% are full houses, 36% are private rooms and the remaining percentage are shared rooms.
The average occupancy of each, according to the company, is 23 nights.
“56% of our hosts are women, it is something significant, as it is a bit higher than what we see in the region,” said Muñoz.
The legislative process
Bill 20,865 was endorsed by the Comisión de Asuntos Económicos (Committee on Economic Affairs) and now is being awaited to be presented to the legislative floor, where legislators will be able to reiterate motions that have been rejected in the commission. Then, the bill will be discussed and voted on in two debates by the 57 deputies.
Subsequently, if the bill passes second voting, it would only require to be signed by President Carlos Alvarado and published in the official newspaper government newsletter, La Gaceta, for it to become law.