Indirect tax snapshot
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Value Added Tax or General Sales Tax (GST) is the main type of indirect taxation in Costa Rica. It levies the sales of goods and certain services. A transaction will be subject to GST if it takes place in Costa Rica by a taxable person, that supplies sales of goods and services in the usual way.
The standard rate is 13%; electrical energy consumption in the residential sector has a reduced rate of 5%. Exceptionally, some services are subject to GST. There is a list of the taxed services such as restaurants, advertising, parking and hotel.
The law stipulates exemptions to the basic goods basket, exports, medicines, veterinary products, agricultural inputs, books, and other goods. The importation of goods is taxed, but the importation of services isn’t.
When the vendor sells the good or the service to the consumer, the tax will be charged in the invoice. Consequently, the taxpayer is the final consumer, but the seller must withhold the VAT. Hence, the seller charges the GST on its sales and pays GST on its purchases, the difference between both will be the amount of GST payable to tax authority.
The non-resident suppliers of electronically supplied or digital services to resident consumers are not subject to GST in Costa Rica. The main reason is that importation of services is not taxable and they are not provided in Costa Rica as a frequent commercial activity.
To register a non-established business with the tax authority as a taxpayer, the non-established business must appoint a fiscal representative, who could be resident or non-resident in Costa Rica. Also, the non-established business must appoint a residential agent, who will receive all the communications.
GST returns and payment must be done on a monthly basis. The sworn statement of sales corresponding to the previous month must be submitted no later than the fifteenth calendar day of each month. At the moment of presenting it, the respective tax must be paid.
The failure of filling the statement or a late submission of the return will have a fine equivalent to fifty percent (50%) of the basic salary.
An informative statement of the purchases and sales of goods and the services undertaken in Costa Rica to the same person and for an amount higher than 2.500.000 colones (local currency).
Yes, penalties can be imposed for a range of errors or omissions, namely the late payment of the tax, resistance to administrative control or repeated failure to provide information to the administration.
No. There is no possibility to reclaim the VAT paid in other country.
A VAT invoice must include:
• full name of the owner or business
• registration number
• invoice number
• invoice date
• conditions of sale: cash, credit, etc
• name of the printer (imprint) and the identification data of the print out
• full name of the buyer or company name
• natural or legal identification number, if the buyer is a taxpayer
• detail of the merchandise transferred, or nature of the service provided, unit price and transaction amount expressed in national currency or foreign currency
• discounts granted
• amount of the selective consumption tax, when the seller is also a taxpayer of the indicated tax and the amount of any other tax
• the value of the services provided or merchandise, separating taxed and exempt
• net sale price (without tax)
• amount of the tax equivalent to the rate applied on the net sale price, with the indication ‘Sales Tax’ or the acronym ‘VAT’
• total value of the invoice.
Electronic billing is being implemented in the country and it is mandatory for businesses to issue, receive and keep the digital invoice of all sales of goods and services.
For further information on indirect tax in Costa Rica please contact:
Mario Hidalgo Matlock