If you are planning on getting married (or divorcing), celebrating a birthday party, anniversary or any other type of celebration, be ready to pay more starting on July 1 when the Value Added Tax (VAT) – Impuesto al Valor Agregado (IVA) in Spanish) – kicks in.
A 13% tax starting on July 1 applies to items like the rent on the ‘salon’ (party room or reception hall), the DJ for the music, a face painting artist, a photographer, rental of chairs, a suit or a dress, the cake, the notary to register the marriage (or the divorce) and even the clown for the kid’s birthday party.
All services, starting July 1 are subject to the 13% VAT.
For example, a clown that normally charges ¢100,000 colones (we’re talking about a great clown), with the VAT you will pay ¢113,000 colones.
The same goes for the notary, the DJ that brings life to your party, the caterer and so on, unless the business or service you are hiring is registered under the “régimen simplificado” (simplified regime) that are excluded from the VAT.
But, before despairing, calling off the wedding, the divorce (cheaper to stay married), telling your kids no more birthday parties, it’s not all bad news since items like alcoholic beverages (beer, wine, whiskey, rum and so on), soft drinks, disposable plates, and glasses are not subject to the tax.
The point to this report is that, if you are planning on any activity included here after July 1, prepare to pay 13% more than you would today.