Costa Rica extends moratorium on VAT for Tourism Services
With the objective of reactivating tourism, one of the main engines of Costa Rica’s economy and development, a sector that employs more than 211 thousand people directly and some 600 thousand indirectly, having generated more than 4 by 2019. In order to promote tourism, one of the main engines of Costa Rica’s economy and development, the tourism sector employs more than 211 thousand people directly and 600 thousand indirectly, having generated more than 4 billion dollars in foreign exchange, which represents 8% of the Gross Domestic Product. Law 9882 “Attention to the tourism sector due to the national emergency by COVID-19, through the modification of Article 26 and transition IX of Law 9635, strengthening of public finances, of December 3, 2018” was enacted.
The sector has been hit hard by the health situation caused by the COVID-19 disease that forced the Costa Rican State to issue Executive Decree number 42227-MP-S, of March 16, 2020, which declared a state of national emergency throughout the territory of the Republic of Costa Rica, establishing the closure of borders, beaches, national parks and others, causing what the Costa Rican Tourism Institute has called a total emergency, and a state of calamity. The Institute has pointed out that for the first time in the history of the country we are facing a zero season (total cessation of tourist income) that will cause losses of 2,000 million dollars (50% decrease in income with respect to the previous year).
The rule is based on two pillars: firstly, the moratorium on the entry into force of VAT for the first two years of Law 9635 for tourist services provided by those duly registered with the Costa Rican Tourism Institute (ICT), i.e. extending the original moratorium by one year, and secondly, giving full VAT credit to international air transport services.
It is important to clarify that tax obligations accrued from July 1, 2020 until the entry into force of the reform contained in this law must be declared and paid to the Treasury under the terms provided in Law 9635.
Carlos Gómez Fonseca
Partner
García & Bodán
Costa Rica