Value-added tax (VAT)
With the new Law (Law No. 6826), the 13% general sales tax is substituted by an Impuesto al Valor Agregado (IVA, or VAT by its initials in English) that entails the expansion of taxable events and taxable base, through the taxation of the sale or transfer of goods, the transfer of intangible assets and rights, and the provision of services; however, there are some exceptions contemplated in the Law. It goes from a criterion of deduction of credits that is quite limited, to a full financial deduction that allows the taxpayer to deduct what they paid to one's suppliers, which in turn would deduct from what they paid and so on throughout the production chain.
Selective consumption tax
The selective consumption tax may be applied at a rate of up to 100% and is levied on goods that are considered non-essential. The tax base is the cost, insurance, and freight (CIF) price plus import duties for imported items or the sales value for items produced in Costa Rica. The tax is levied at only one stage in the sale of merchandise. Payment of the tax is required at the time of importation or, for articles produced in Costa Rica, within 15 days of the month of the sale.
Customs duties/import tariffs
In Costa Rica, all importation of goods and merchandise, with certain exemptions, are liable for corresponding import tariffs and customs duties. Other taxes (e.g. VAT, selective consumption tax) are also levied on the importation of said goods and merchandise.
The most important legal instruments for customs regulations are the Central American Uniformed Customs Code, the Customs Law and its rulings, and other administrative rulings that are periodically issued by the Customs Authority.
Each local municipal government oversees real estate appraisal. The annual property tax to be applied throughout the Costa Rican territory is 0.25% of the appraised value, registered in the respective municipality where the tax liability originates.
Real estate transfer tax
Real estate transfer tax is calculated as 1.5% of the selling price of the real estate or its property tax value, whichever is higher. The tax is triggered by the direct sale of the real estate or through the indirect transfer of real estate when there is a modification in the control of the entity holding the real estate.
Stamp duties in Costa Rica are determined according to the transaction that is carried out (e.g. property transactions, service contracts, movable assets transactions). The tax is of five colones by each thousand of the contract value, and the taxable event varies according to the condition of the document to be stamped.
The payments realised abroad for the use of a franchise will be subject to remittances abroad with a 25% withholding tax (WHT).
Withholdings on salary
Companies are required to withhold from employees the amount corresponding to the tax on salary according to the following progressive table on a monthly basis:
|Salary (CRC)||Withholding rate (%)|
|Up to 863,000||0|
|863,000 to 1,267,000||10|
|1,267,000 to 2,223,000||15|
|2,223,000 to 4,445,000||20|
The tax applies over the excess over each of the frames, and the withholding is considered as 100% of the tax.
There is also a 13th annual payment, called 'Aguinaldo', which is free of income and social security taxes.
Social security contributions
Companies must withhold the monthly contribution to social security and submit its own contribution calculated as a percentage of the monthly income received by the employee:
|Social security contribution||Contribution rate (%)|