(QCOSTARICA) Either through the provider directly, or card issuers, Netflix, Tinder, Amazon and other cross-border digital services will add the 13% Value Added Tax (VAT) beginning August 1.
These are services provided by a provider not domiciled in the country through the Internet or any other digital platform and are consumed in Costa Rica.
Whoever offers you the service can choose to directly charge you the VAT, or the tax is collected by your credit or debit card issuer.
For example, if you paid US$10 for a service, on August 1 you would pay US$11.30.
“It seeks to establish in detail the guidelines to be followed and the formal and material duties that providers of this type of service must comply with, as well as the issuers of debit or credit cards that the Value Added Tax Law established responsible for collecting this tax,” said Priscilla Zamora, general director of Taxation.
All the services that will be more expensive are included in the La Gaceta published this Friday, June 12. Scroll to page 138, ‘Anexo 6″ of La Gacetafor the complete list or www.hacienda.go.cr, that will be updated at least every six months in order to include new suppliers or exclude those who have voluntarily registered as taxpayers.
Below are examples of some of the most widely used cross-border services that starting August 1 will be 13% more expensive in Cosa Rica:
- Amazon Prime Video
- Avast Antivirus Premium Security
- PlayStation Store PS Plus
Why should Netflix, Amazon and others be taxed with VAT?
The short and sweet answer is obvious without having it to be said.
The long simple answer is that legislators, as part of the approval of the Tax Reform, Ley de Fortalecimiento de las Finanzas Públicas, approved in December 2018 and went into effect in July 2019, which included the introduction of the VAT, chose to tax the imports of goods and services provided by non-domiciled persons that are consumed or used in our country.
The purpose of this principle is for Costa Rican companies to be competitive in the foreign market and, in turn, to promote adequate competition in the domestic market between national and imported products or services. These objectives are achieved by structuring a neutral and traceable VAT throughout the production and marketing chain of goods and services.
Costa Rica is a pioneer in the world in applying this principle “cross-border digital services”. But its application can never lead us to scenarios in which services that are consumed abroad are taxed with VAT, because if it were to occur it would be distorted the very essence of this principle.