The Ministerio de Hacienda (Ministry of Finance) proposes to charge the 13% Value Added Tax (VAT) on purchases of 191 cross-border online services and websites available consumers in Costa Rica.
The list includes famous streaming services such as Netflix, HBO and Amazon Prime; video games such as Epic Games (creator of Fortnite), Playstation and Nintendo; advertising services on social networks (Facebook Ads, Instagram Ads and Twitter Ads); online music like Spotify and iTunes; and even antivirus purchases and website hosting, among others.
Cross-border digital services are all purchases that a consumer makes within Costa Rica through online platforms that are based outside the country.
The list of services was published on Monday, December 2, by the Dirección General de Tributación (DGT) – Tax Department – in a draft resolution that establishes the mechanisms to collect the tax on cross-border digital services.
This is the third draft of this resolution published by the Treasury. However, this latest version is the first one that includes the list of 191 platforms to which the tax would apply.
The public has up to December 16 to receive comments on the proposed tax, after which the Tax Administration will evaluate the comments to determine if it is necessary to make important adjustments to the text.
In a nutshell, the tax would be applied to purchases made in Costa Rica using a debit or credit card issued in Costa Rica. Purchases made with a card issued outside the country, though the service is being consumed in Costa Rica, would not apply. For now.
According to the proposal, the service provided would be required to register for the collection of the value added tax, charge the consumer and remit to the tax department.
The DGT is also looking at a process where the card issuer if to withhold the VAT when a consumer makes a purchase of a cross-border service.
Banks and financial institutions issuing debit and credit cards would withhold on purchases based on the published list.
The DGT can modify, from time to time, the services on the list, based on consumer demand.
The process would include the ability of the consumer to obtain a refund if they experienced an improper charge, in which case would have to submit a form to Taxation for approval and can then make a request to the issuing bank for a refund of the charge.
Following is the list from the of cross-border services the Ministry of Finance proposes to tax.
LEVEL UP INTERACTIVE
SKR*UNITED GAMES GMBH
MEGA CLOUD SERVICES
TWITTER ONLINE ADS
THE FINANCIAL TIMES
FINANCIAL TIME LT
FINANCIAL TIME LTD
NEW YORK TIMES
THE SURFER’S JOURNAL
JOHNS HOPKINS UNIVERSITY PRESS
WOOD WORKERS JOURNAL
UNIVERSITY OF CHICAGO PRESS JOURNALS
SAGE PUBLICATIONS UK
NYT*NYT TIME SYNDICATE
TIME NEWSPAPERS LTD
TRAINING SOLUTIONS LTD
SKYPE SUBSCRIPTION SKYPE
YAHOO SMALL BUSINESS
LEIDEN TECHNOLOGY DO B
LEIDEN TECHNOLOGY DO B
TELEFONICA GLOBAL SERV
SMILES FIDELIDADE SA
AMAZON WEB SERVICES
MOUSER ELECTRONICS INC
DKC*DIGI KEY CORP
For the draft published by the Ministerio de Hacienda, click here and scroll down to page 18.