Costa Rica Tax Reform Law Part One

Costa Rican Congress approved a new tax reform. New taxes commencing July 2019, Hacienda will expand the number of products and services that will be taxed with IVA or “Value Added Tax”

Starting July 1, 2019 many professional services such as attorneys, engineers, doctors, dentist, accountants, realtors, etc. will be taxed with IVA/VAT. These service providers will be obliged to include an additional 13% onto the invoices they issue.

Regarding Real Estate, all commercial and residential leases over $1,100 per month will be taxed 13%

The following rates will apply:

  • 13% is the general tax rate
  • 4% for airline tickets and private healthcare services
  • 2% for medical products, raw materials and machinery used for production, insurance premiums, purchase and sale of university issued products
  • 1% the list of food consumption products that make up the basic food necessities

The law includes several exemptions that will not be subject to the 13% tax rate as follows:

  • The rental of housing where the rental amount is less than the equivalent of 1.5 base salaries (646,000 Colones/$1,100 dollars)
  • The electricity consumption of less than 280 kw/h
  • Water consumption of less than 30 cubic meters
  • Export of goods
  • Sales of goods and services for free trade zones
  • Interest and fees for loans and credits
  • Orthopedic equipment, rehabilitation and wheelchairs
  • Enrollment in public universities
  • The fees and monthly payments of professional associations
  • Premiums for labor, agricultural and social interest housing
  • Care and elderly care networks
  • Books in any of their formats
  • The goods and services acquired by the Community Development Associations

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