Tuesday, 7 July 2020
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Services and products would cost more in July

VAT will enter into force in areas that did not have it. Sectors ask to postpone its entry into force due to the crisis facing the country.

(QCOSTARICA) Tighten the purse strings, come July we can expect to pay more for rice, bread, beans, the pet products and even to buy a house.

Despite the crisis, at the moment the application of taxes to more products has not been modified for the second half of 2020. Image: Shutterstock

This is because it was established that in July month the Value Added Tax (VAT) would go into effect in some sensitive areas that had been delayed.

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The VAT, if not postponed, would apply to products that are currently not included. On July 1, there will be a 1% VAT for basic basket products, agricultural machinery, and veterinary supplies, and 4% for recycling, tourism, and construction services.

However, some sectors are asking for a postponement from further impacting the economy, already affected by the consequences of the Coronavirus.

“We are talking about 189 products that make up the basic tax basket, yes, 1%, but at times like this pandemic, any increase affects the pockets of families,” Iliana Navarrete, partner at Raymundo Volio Abogados, told La Republica.

This is also the feeling of some legislators who promote initiatives to postpone the validity of VAT on these goods and services for at least one year.

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Esteban Acón, president of the Construction Chamber, one of the sectors to be affected, said the tax increase at this time will hit investment and will generate even more unemployment.

“Construction is a sector that, if it is not handled with the utmost care in the handling of VAT, may be involved in severe tax noncompliance due to mismanagement of the credit right or with an increase of 13% of most of its costs,” warned Carlos Camacho, managing partner of Grupo Camacho Internacional.


1% VAT

  • Basic tax basket
  • Animal feed supplies
  • Agricultural goods and supplies
  • Veterinary Products
  • Farm machinery

4% VAT

  • Recycling collection
  • Tourist services registered in the ICT
  • Civil works architecture, surveying, engineering
  • Construction services
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