Tuesday 27 September 2022

Costa Rica’s Taxman Faces A Challenge With Foreigners With Foreign Payment Options

Paying the bills


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27 September 2022 - At The Banks - BCCR

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Rico’s TICO BULL  The current government, as its three predecessors, is intent on introducing sweeping tax reforms that include the introduction of a Value Added Tax (VAT) or Impuesto al Valor Agregado (IVA) in Spanish, that proposes to tax many items not taxed under the simple Impuesto de Ventas (IV) or Sales Tax currently applied to consumer purchases.

Sit bakc, enjoy, mostly like the IVA, if and when it is implemented, won’t apply to your Netflix if you don’t make payment using Costa Rica plastic.

One of the items that would be taxed IF and when the IVA is approved and goes into effect is Netflix.

That is, for the current monthly Netflix of $10.99 (¢6,300 colones), the cost would be US$12.41 with the 13% tax, if payment is processed in Costa Rica.

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To collect the tax, the law would require issuers of credit and debit cards to collect the tax when processing the payment.

But what of payments made on cards or other online payments gateways with no connection to Costa Rica payment options such as credit/debit cards issued in the U.S., Canada, Europe, Paypal, Payoneer, Paxum, etc.?

That is, the tax on your Netflix or digital services such as hosting for websites, domain registration, antivirus, etc, would only apply if you made payment using a credit/debit card issued in Costa Rica.

Hopefully, the short arm of the Tico tax man won’t reach far enough to tax us foreigners who call Costa Rica home, outside the borders.

Again, not charged on a Costa Rica card means no IVA.

Maybe. In Costa Rica, everything is a maybe. Even maybe itself.

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Use the comment section below or comment on our official Facebook page. I would like to hear your opinion on this.

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"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.

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