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Today’s Top Headlines

IDB Urges Costa Rica To Push Tax Reform Forward

by Mike Godfrey,, Washington

14 August 2015

The President of the Inter-American Development Bank (IDB), Luis Alberto Moreno, has welcomed a number of tax reforms proposed by the Costa Rican Government and urged the legislature to approve them without delay.

The Government announced recently that a tax reform bill designed to boost revenues has been submitted to the legislative assembly. The bill contains a proposal to replace the 13 percent general sales tax with a value-added tax (VAT) with an initial rate of 14 percent. The rate would rise to 15 percent in the second year. It also contains an increase in individual income tax rates on a sliding scale up to 25 percent.

Following a meeting with Costa Rican President Luis Guillermo Solís on August 11, 2015, Moreno said that the proposed package of reforms is "solid." He said that the reforms are needed "urgently" and that the time for discussing them has passed.

President Solís also said recently that Costa Rica is in urgent need of fiscal reforms. He said that the country's deficit will grow to 6.4 percent of gross domestic product (GDP) next year if appropriate action is not taken. The deficit was 5.4 percent of GDP in 2014.

TAGS: tax | value added tax (VAT) | sales tax | gross domestic product (GDP) | tax rates | Costa Rica | tax reform | individual income tax

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