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Costa Rica 13% VAT implementation

  • Jun 6, 2018 | Richard Asquith

Costa Rica 13% VAT implementation

Costa Rica has published a plan to introduce a 13% VAT regime to replace its existing Sales Tax.

The current 13% sales tax is levied on imports and domestic sales of all goods. There are exemptions for basic foodstuffs, medicines and other essentials. Services are exempt. The country needs to widen its tax based, which means subjecting services to the new VAT – including the high-growth B2C digital services market. Although the full 13% on services may be phased in over a 4-year period. Services now accounts for almost half of the country’s economy.

The new draft law includes provision for a reduced VAT rate of up to 4% to cover education, public transport, healthcare, insurance, social hosing and other supplies. There would also be an exempt category of supplies, including air transport, low-cost housing, water and electricity.

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.