Costa Rica – VAT Law

Link the VAT Law 6826

The VAT Law (VATL) came into force in Costa Rica on 1 July 2019, amending the prior Sales Tax Law.

Relevant changes: all services will be taxable, the concept of goods includes all transfers of tangible assets (fixed assets or inventories) and intangible assets (software, payment of royalties, etc.) which are also deemed as a service and taxable.

There are specific exemptions, including: interest on loans, assignment of shares, exports of goods or services, renting of houses (if a limit is provided for), printed books, private education services (primary and secondary school), reorganisation transactions (between related entities) and the transfer of the business through shares or the sale of the substantial assets.

The principle of the VATL is that all input taxes are credit and are deducted from the output (debit). Therefore, the taxpayer would pay the difference or, if the credit is higher than the debit, there would be a balance in favour of the taxpayer.

If the tax rates of the goods or services are lower than 13% (standard rate) whenever the VAT is collected, the input VAT paid by the taxpayer would be credited in the percentage of the ratio of sales at different rates to total sales. This mechanism is known as the ratio method.

See also

• KPMG – Indirect Tax Guide
• WTS
• Quaderno

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