Sales and Import Tax
The Costa Rican legislature passed a law in 1995 that raised the sales tax in the country from 10 percent to 15 percent, later providing for a drop to the current 13 percent level used on transactions. This level of sales tax is collected to avert a more serious personal income tax and keep taxation in area where goods change hands.
Though some sites have reported that services are rarely taxed in Costa Rica, if you are exploring the possibility of setting up a service-oriented business in Costa Rica, you should probably plan to include the collection of sales tax as part of your business operations. The actual law states that a specific set of service-oriented business falls under the law of taxation.
This set of business types includes hospitality businesses such as restaurants and hotels, entertainment utility services such as cable and telephone, cleaning services such as laundry and car wash business and other assorted types of businesses. If you are interested in setting up a service-oriented business in Costa Rica and are unsure whether sales tax would have to be a part of your operating procedure, Meléndez & Bonilla would be glad to assist you in that area.
Setting up a service-oriented business in Costa Rica can be a rewarding experience, but before you pursue that opportunity, you should have an idea of the kinds of requirements you might fall under as it relates to taxes such as a sales tax. With over 15 years experience serving customers of all types, Meléndez & Bonilla brings a great deal of knowledge to any business creation and would be a great local asset to have in Costa Rica.
Of course, as in other areas of the world, there are exceptions to the sales tax in Costa Rica. Food is largely exempted from a sales tax charge, as are purchases of medicine and agricultural products. Every business product is different if you are unsure as to whether sales tax is applicable to the product you wish to sell in Costa Rica, contact Meléndez & Bonilla directly for advisement in that area.
Some other special products have received different tax rates for their use. For wood products, a 10 percent sales tax applies and for the consumption of electricity, a 5 percent sales tax is collected. Over time, these regulations can certainly change and Meléndez & Bonilla would be glad to keep you and your business up to date on how changes in the tax code may affect your current or prospective business.
One thing to keep in mind is that the 13 percent basic sales tax is charged at the time goods are imported as well, not just when they are sold. The only exemption to this taxation structure takes place if the import tax is charged and then the goods are then sold as an export. This export would not incur a separate sales tax charge.
For some goods, an additional selective consumption tax is used, a charge that can fall anywhere between no charge and a 60 percent tax. These taxes vary greatly depending on the good being taxed, so consulting Meléndez & Bonilla or another tax authority on your specific product is the most prudent thing to do when examining the possibility of opening up a commercial venture in Costa Rica.
Sales and import taxes represent a significant source of income for the Costa Rican government and largely offset some other tax charges used within the country that have low rates. Don’t be surprised by the sales tax rates after you have already set up your business venture in Costa Rica.
Meléndez & Bonilla can stand by your side, giving you a local, trusted voice on these types of taxation measures, giving you peace of mind at the same time. Contact us directly through the Contact Us page for further information on sales tax or other taxation issues.