Thursday, 29 October 2020

Costa Rica Exonerates Millions of Dollars In Fuel Tax To Airlines

United Airlines parked at the gate at the Juan Santamaria (San Jose) airport

Q COSTA RICA – Costa Rica exonerated US$226 million dollars (¢128.501 billion colones at the current exchange rate) of the fuel tax on passenger and cargo airlines in the last five years.

The figure is from information requested from the Ministerio de Hacienda (Ministry of Finance).

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According to a detail sent by the Deputy Minister of Revenue, Fernando Rodriguez, only in 2016 the exemption reached ¢30.182 billion colones.

From 2011 to last year, the annual exonerated amount grew 27% in nominal terms.

The single fuel tax was created in the Ley de Simplificación y Eficiencia Tributarias (Ley8114) – Tax Simplification and Efficiency Law, of July 4, 2001. The exoneration is established in Article 1.

“Excepted from the payment of this tax, the product intended to supply the airlines and merchant ships or passengers in commercial lines, all of international service,” states the legislation.

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The Ministry of Finance indicated that currently 67 airlines benefit from this exemption, but due to the principle of confidentiality, the details of each exemption receive cannot be provided.

Tourism Minister, Mauricio Ventura, considers the exoneration essential for Costa Rica to maintain a competitive position, both to attract tourists and ensure Costa Rica’s positioning as a magnet for business.

The minister downplayed the amount, saying the exemption represents less than US$50 million dollars per year, equivalent to approximately 1.5% of revenue generated by tourism to the country.

Pablo Heriberto Abarca, president of the National Chamber of Tourism (Canatur), emphasized the exemption is why we have had success in attracting airlines.

For Rodriguez, “the exemption to airlines is an issue that must be assessed in the light of cost-benefit”.

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