Friday, 30 October 2020

Costa Rica at the gates of a tax on banking transactions

In addition, three other new taxes on income and property would be part of the IMF loan deal; as a global income tax

Front Page Politics Costa Rica at the gates of a tax on banking transactions

In addition, three other new taxes on income and property would be part of the IMF loan deal; as a global income tax

(QCOSTARICA) The economic stability proposal that the Government will present to the International Monetary Fund (IMF), to obtain financing of about USs$2.25 billion dollars, contemplates the introduction of four taxes in order to increase the income of the public sector.

President of Costa Rica, Carlos Alvarado

The first of the new taxes would be a tax on banking transactions, paid on any type of money transfer.

- payin the bills -

During the first two years, the tax would be 0.3%, the equivalent of ¢3,000 colones for every million colones. During the next two years, the rate would drop to 0.2% (¢2,000 per million).

The second is a temporary increase in income tax rates for businesses and individuals, as well as for wages.

On Monday, President Carlos Alvarado announced that wages below ¢800,000 colones monthly would not be taxed.

Currently, income tax is charged on salaries over ¢840,000 monthly, in scales ranging from 10% to 25%. The higher the income, the higher the tax.

- paying the bills -

In the case of corporations, the tax on profits is up to 30%.

Third, a new property tax would be imposed in favor of the central government. Currently, there is a property tax, but in favor of the municipalities. The Executive plans to add an additional tax.

Currently, the annual municipal real estate tax is 0.25% of the property’s value. The Executive intends to add an additional 0.50% paid to the Ministerio de Hacienda (Treasury).

The fourth tax would fall on the surpluses of the large cooperatives, which today are exempt from paying taxes to the Treasury.

Since the discussion of the tax reform, in 2018, the PUSC legislator, María Inés Solís, proposed to tax large cooperatives, but the proposal did not have support in Congress.

The Economic Affairs Committee resumed the debate at the beginning of 2019, after 36 legislators from different political parties endorsed a project presented in October 2018.

- paying the bills --

The idea was to charge 10% to cooperatives who generate surpluses between ¢250 million and ¢750 million and 20% to those above the ¢750 million colones.

However, in March 2019, the idea was shelved, considered “ill-conceived” and “unconstitutional.”

The government would start negotiations with the IMF in a week or two. In the photo, the ministers of Finance, Elian Villegas (left) and Pilar Garrido (right), wtih President Carlos Alvarado (middle).

A serious error

La Republica reports that according to politicians, businessmen, and economists it consulted, the Government of Carlos Alvarado would be committing a serious error including a tax on bank transactions and the collection of world income in order to obtain the IMF loan.

Daniel Suchar, an independent economist, referring to the possible tax to bank transactions, believes there is a risk that people will prefer cash transactions, which would imply that banks would have less money to lend.

Meanwhile, a global income tax would scare away foreign investment, which is much more serious at a time when the country has unemployment above 24.4%, added María Inés Solís, legislator for the Partido Unidad Social Cristiana (PUSC).

A bureaucracy with more than 300 institutions makes the country expensive in its public services, while reducing its competitiveness, according to Enrique Egloff, President of the Chamber of Industries. La Republica

Entrepreneurs such as Enrique Egloff, President of the Chamber of Industries, considers cutting public spending through the elimination of positions, closure, merger, and sale of state assets – beyond Bicsa and Fanal – would help the State to eliminate the duplication that today generates little effectiveness and high costs.

Today, Thursday, September 17, the final proposal is expected to be announced.


"Rico" is the crazy mind behind the Q media websites, a series of online magazines where everything is Q! In these times of new normal, stay at home. Stay safe. Stay healthy.

Related Articles

Airlines will have 300,000 seats available to travel to Costa Rica in December

QCOSTARICA - Costa Rica will have, in December, potentially 299,822 available...

Costa Rica gets set to receive all tourists as of November 1

QCOSTARICA -  With two days before Costa Rica opens its borders...


Avianca reopens travel to Central and South America

QCOSTARICA - Avianca, the Colombian airline, announced that it will resume its operations to Costa Rica with options for travel to Central and South...

Vatican awaits debate on secular state before granting legislator audience with the Pope

QCOSTARICA - The Vatican will wait for the Legislative Assembly to begin the discussion of the secular state before giving Costa Rica legislators an...

COVID-19 in Costa Rica: 862 new case for Tuesday; after 50 days fewer than 500 people hospitalized

QCOSTARICA - For Tuesday, October 27, the Ministry of Health reported 862 new cases of COVID-19, of which 248 are by epidemiological link and...

Congress approves reduction in 2021 Marchamo

QCOSTARICA - As had been expected, Congress approved on Tuesday night the bill to reduce the property tax of vehicles of the 2021 Marchamo. By...

“Gag Law” approved by Ortega will enter into force in 60 days

TODAY NICARAGUA – The 70 votes of the ruling Frente Sandinista (Sandinista Front) in the National Assembly approved, without opposition, the Special Law on...

Distrust of sectors complicate signing an agreement with the IMF this year

QCOSTARICA - Reaching a structural adjustment agreement with the International Monetary Fund (IMF) this year seems like an impossible mission for President Carlos Alvarado,...

Let's Keep This Going!

To be updated with all the latest news and information about Costa Rica and Latin America.

Log In

Forgot password?

Forgot password?

Enter your account data and we will send you a link to reset your password.

Your password reset link appears to be invalid or expired.

Log in

Privacy Policy

Add to Collection

No Collections

Here you'll find all collections you've created before.