The Costa Rican government has said that increased efforts to tackle tax avoidance and evasion yielded a deeper-than-expected reduction in the territory's fiscal deficit during 2011.
The government confirmed that increased audit activity and greater safeguards against tax evasion had led to the nation achieving an end-year deficit of 4.4% of gross domestic product (GDP), significantly below the previous target of 5.5% of GDP. During 2011, tax revenues increased by some 11%.
The government admitted however, that the budget situation remains 'delicate' and has confirmed it will continue to push forward with tax reform this year despite legal challenges which have held back progress. The government is seeking to scrap the nation's comparatively low sales tax rate of 13%, and replace it with a value-added tax, most likely at 14%. The government is also reducing the number of concessions available to enterprises operating in the nation's tax-free zone.
.Tags: tax | offshore | expatriates | tax havens | value added tax (VAT) | Costa Rica | tax avoidance | fiscal policy | tax reform | VAT
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