Tuesday 28 September 2021

Lack of Law Hampers Finance Ministry Collection of Sales Tax on Short Term Rentals

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Owners of luxurty homes rented for tourists for less than 30 days are required to pay sales tax on the rent.
Owners of luxurty homes, including condos and apartments, rented to tourists for less than 30 days are required to pay sales tax on the rent.

QCOSTARICA – Luxury homes that rent out daily or weekly to tourists are the target of the Ministry of Finance (Ministerio de Hacienda) to collect the 13% sales tax from the owners. But there is a problem: still lacking is the approval of the bill on the collection of the tax.

“Hotel operators, with good reason, have complained about having to compete with such homes, rented to vacationers and not paying the sales tax. We are leveling the playing field, by applying the Ley del Impuesto de Venta (Sales Tax) on homes for temporary stay,” said  Fernando Rodríguez, Deputy Minister of Finance.

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Rodríguez added that hoteliers do not consider just that there are condo and apartment operators providing tourist accommodations but not having the tax responsibility.

Earlier this year, the Finance ministry said that homes – that includes condos and apartments – that rent out for less than 30 days (short term rentals) are subject to the sales tax, that is the owner must pay the 13% sales the tax on the rentals.

To that end, the Finance ministry, presented a bill to help in the fight against tax fraud, allowing it to develop a registry of such, then cross checking to ensure that the owner, national or foreigner, is declaring the sales tax on the rentals.

“We are sorry that we could not have this (the passing of the bill) at the moment, but it is part of the political dynamics,” said Rodriguez.

For now, the Deputy Minister added,  the “intelligence work” will continue in the coming months, linking information on luxury homes in the country and at least see if the owners are declaring the relevant income tax.

Once the bill is approved and goes into effect, a landlord will become a taxpayer of sales tax on rentals. While in most cases the rentals are for longer than 30 days (ie. monthly and yearly), landlords are required to file a formal statement to such (exempt from the sales tax) or will be exposed to a penalty.

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Rodriguez said they do not yet have a figure on the tax collected in 2013.

Source: Crhoy.com

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