Costa Rica To Introduce VAT From July 1

by Mike Godfrey, Tax-News.com, Washington

21 June 2019

Costa Rica will introduce a new value-added tax regime, in place of sales tax, starting July 1, 2019.

The VAT will have a broader scope than the current sales tax, in applying to services as well as goods. It has legislated for the change in Law No. 9635 of December 3, 2018.

According to the implementing regulations for the regime, included recently in the Official Gazette in Executive Decree 41779, as expected, the regime will feature a 13 percent headline rate, and three reduced rates, of four, two, and one percent.

The regulations state that the four percent rate will apply to domestic and international air fares, and to private human health services. The two percent rate will apply to certain medications and to private education services that are not otherwise exempt, and the one percent rate will apply to certain basic goods and services.

There will be exemptions for exports, and related services and equipment necessary for those operations.

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