COSTA RICA NEWS – Finance Minister, Helio Fallas, confirmed that after meeting with the president of the Institutio Costarricense de Turismo (ICT), Wilhelm von Breymann, they agreed to sit down next week and negotiate with the tourism sector, but for the time being the sale tax stays and is important, in a small way, to the State’s finances.
The reference to the tax is the 13% sales tax on the vacataion rental properties. The Finance ministry two weeks ago clarified that any rental of a property for less than 30 days, rented to tourists, must charge and remit the 13% sales tax.
Fallas said there is law that Hacienda (Ministry of Finance) has to respect. “The decision (to implement the sales tax) was taken in accordance wtih a legal analysis made by the Directorate General of Taxation and tha main reason for its application is the high fiscal deficit,” said Fallas.
The minister added that the Ministry of Finance is not political, that though there is a minister (a politician), there is a law and its application is defined by the Directorate General of Taxation, decisions the minister may not influence.
At the meeting between von Breymann and Fallas was also present the ministro de la Presidencia, Melvin Jiménez.
The Cámara Nacional de Turismo (Canatur) and the Cámara de Hoteles de Costa Rica (chamber of hotel operators) have been asking the government to hold off collections on the sales tax for at least ten days while they work out the problem.
From the point of view of the Canatur, the measure (sales tax) would cause of paralysis in the sector, increase informality (under the table rentals), a break in the production chain and the downsizing, even closure, of some businesses.
Pablo Heriberto Abarca, the head of the tourism chamber, suggests that the tax authority must consider whether the measure will generate the expected revenues or to the contrary, have a negative effect on the main engine (tourism) that drives the Costa Rican economy.
How the heck will the monitor it – know who is a private rental or the owner letting friends & family use their home??
How much $$•effort will the hacienda put out to enforce this??
Will that balance out & make them LOTS of $$?
What are the potential repercussions to an owner since that now makes their home a business – if they’re not zoned for a business (I’ve seen this happen in other countries before)
Here’s a HUGE PROBLEM I see with this. Right now MANY owners are DESPERATE because tourism is down a LOT. Screw what the officials tell you – ASK a REAL owner of a hotel or private vacation rental or look in a restaurant or store & ask THEM!! IF tourism is really doing any better (& they’re not fudging their #s because of all the ExPats living here without rsidency yet that check off “Tourist” 4 times a year) – MAYBE it’s the all-inclusives – but that $$ does NOT go out INTO the community!! So MANY hotels/vacation rentals are giving incredibly low prices right now JUST to help cover their expenses.
There are MANY reasons that tourism is down – MANY of which go back onto the governments shoulders!!
• CR is now MORE expensive for MOST things tourist related than most things in the U.S. anpar.
• Even in Medical Tourism, CR is now at the high end of Medical Tourism for pricing so many people are choosing Mexico & Columbia for closer destination & now Nicaragua is WAKING UP & BEYOND LOTS cheaper than CR.
• Safety is getting worse & worse (& VERY FEW people bother reporting it thinking “Why bother” since RARELY do they even catch the person(s) let alone prosecute them, let alone keep them in jail for any REAL length of time) & the tourist world knows about it.
• Utilities•Gas are HIGH (I was JUST in Sarasota/Tampa Florida in June – electricity is LOTS higher in CR than in Florida).
• Flights are QUITE high now
• Don’t EVEN get me started on the expense of employees (ESPECIALLY getting RID of BAD employees & MANY house keepers not having the level of clean/service many tourists are use to)
• Price of Gas, price of renting a car with ALL the insurances you REALLY NEED here for your own safety.
I DO see how there could be a balance here but if people can’t get clients into their vacation rental places, chances are REALLY GOOD they’ll sell them & from what I’m hearing, 2 of the biggest groups of people buying properties & businesses right now seem to be the Columbians & Chinese. . . .
To ME, IF they wanted to get more $$ – start charging & ENFORCING more $$ on Property Taxes on properties valued over $200,000 or so (& do NOT say the $$ is going to give housing to the poor as MOST people would NOT want to pay if that’s why they’re paying it. Give it [& do NOT just “Say” it] to improving roads & infrastructure like they do in MANY countries.
Just something more to think about!!!