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Costa Rica Plans Online Gambling Tax

by Mike Godfrey,, Washington

14 May 2010

The newly elected president of Costa Rica, 51 year old Laura Chinchilla Miranda, has an ambitious agenda to combat crime, for which she needs to increase revenues by introducing a 5% tax on casinos and online gambling earnings, with a target of raking in an extra 1% of GDP in tax revenue.

According to the Economist, the Costa Rican government collects a mere 14.8% of GDP in taxes, and its most recent annual deficit was 4% of GDP.

In the last fifteen years Costa Rica has been an important place to conduct E-commerce, especially in the e-gaming sector. Companies, even when not incorporated in Costa Rica, are permitted to operate e-gaming websites under an all-encompassing, simple data processing license. In addition, no tax is paid on foreign-sourced income. About 380 companies operate under such licenses, turning over hundreds of millions of dollars a year.

The likelihood that President Chinchilla can carry her program through has been brought into question, however, because she relies on a pact with the Libertarian Movement leader, Otto Guevara, to get legislation passed and Guevara has pledged to filibuster any tax increases.

Many previous attempts to tax this sector have failed, and Costa Rica's main North American market is already threatened by initiatives in the US and Canada to bring e-gaming back home.

A comprehensive report in our Intelligence Report series examining the new possibilities that offshore e-commerce open up for business, and analysing the offshore jurisdictions that have led the way in offering professional e-commerce regimes for international business, with a particular focus on e-gaming, is available in the Lowtax Library at and a description of the report can be seen at
TAGS: tax | business | commerce | law | internet | e-commerce | gambling | Costa Rica

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