Tuesday 3 August 2021

New Car Dealers Forced To Register 2018 Cars As 2017

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When is a 2018 car model a 2017? Photo Rafael Pacheco / La Nacion

Q COSTA RICA – When is a 2018 model car year a 2017?  When in Costa Rica and the new (2018) vehicle is stuck in customs.

On Friday (March 24) the Dirección General de Tributación (DGT) – Directorate General of Taxation – suspended the decree that prevented new car dealers and distributors from importing latest model vehicles prior to the month of September.

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For example, 2018 models cannot be in the market before September, despite they being physically in the country.

Last week the Q reported on the Attorney General’s view that the restriction is unconstitutional.

The restriction on imports of 2018 models came into effect in October last year, when the Ministry of Finance issued Decree No. 39941-H.

“… The Taxation Department decided that decree 39941, issued on August 10, 2016, will not apply until the Constitutional Court resolves a constitutional motion filed against it. The government issued this rule to prevent the advance entry of latest model cars devaluing the rest of the vehicle fleet and by association also devaluing tax collections from sales, selective consumption and vehicle ownership.”

Nacion.com reports that “…The decision has now allowed a group of importers to nationalize (register in the national property registry) 81 vehicles that are 2018 models which had been left stranded in customs warehouses, but as if they were 2017 models.”

The concern of the DGT is that allowing the nationalization of 2018 vehicles prior to September it affects the ‘tax value’ of older models, in effect resulting in an over all lower collection of the annual property tax levied on every vehicle in the country, and collected through the Marchamo, payable by December 31 of each year.

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La Nacion also reports that last week, the Deputy Minister of Revenue, Fernando Rodríguez, refused to provide an estimate of the figure of the State’s loss in taxe revenue resulting from the brake on late-model imports.

Although the fiscal (tax) value and real world or street value of a vehicle can be quite different, the two are many times related and keeping car values in the country high is good for the government: higher tax values that translate to higher street equate to higher tax revenues for the State coffers.

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