Governments around the world are challenged with finding ways to help their citizens, business owners and local municipalities survive the financial impact of income loss due to COVID-19 quarantine measures. Globally, for a significant amount of time, non-essential businesses were ordered to shut down and domestic and international travel restrictions were put in place.  Costa Rica was no exception.

The good news is that Costa Rica is recognized as a world leader in acting early to reduce the curve of Coronavirus spread. Furthermore, Costa Rica has also put into place numerous laws to provide financial relief. One such law is 9848, the “Law to Support the Local Taxpayer and Strengthen the Financial Management of Municipalities in the Face of the National Emergency due to the COVID-19 Pandemic.”

Law 9848 provides much needed tax relief for business owners.

Law 9848 took effect on May 22, 2020. It established measures to support taxpayers, and also to reinforce and expedite the financial management of local municipalities facing pandemic-induced economic hardship.

These four measures assist taxpayers.

1. Moratorium on municipal commercial license (“patente”) payments

Article 12 of the new law authorizes municipalities to give businesses a moratorium on the payment of taxes on their “patente” for up to nine months. The business owner must show a decrease in their gross income of no less than 20% compared to the same tax period in 2019. Additionally, the business must be current with its obligations corresponding to the tax periods prior to the emergency declaration.

2. Temporary operation permit suspension

During the emergency, the law 9848 allows business owners to temporarily suspend their business for a period of up to 12 months. The business will not generate economic obligations to the municipality during the suspension period.

3. Moratorium on obligations 

Article 13 allows municipalities to grant taxpayers a moratorium on obligations such as fees (for example, garbage collection), payments for public services, municipal taxes, construction, licenses, and others for up to nine months. Each municipality can establish which of these obligations are applicable to the moratorium, and its term. Applicants must prove a decrease of at least 20% in their 2020 VAT tax forms or a reduction in workday hours, suspension of labor contracts or job layoffs.

4. Payment arrangements 

Article 16 enables municipalities to grant taxpayers payment arrangements lasting up to 24 months for municipal fees, licenses, municipal services, taxes and concession fees.

Law 9848 states that as of June 12, 2020, municipalities and municipal councils must create and approve a moratorium and fee reduction plan. Once a financial study has been completed, in case of a moratorium (Article 13), the plan must also determine which specific fees, municipal services, municipal taxes and concession fees the benefit will be applied to. 

Furthermore, this fee reduction plan must establish these terms and conditions: moratorium period for each type of moratorium and fee reduction, and the method and application period that interested parties will have.

Like the other positive actions Costa Rica has taken to support the country during this time, law 9848 provides much needed tax relief for business owners. Additional explanation may be needed to cover all the important details.  

We are here to answer your questions and provide support during this challenging time. Please feel free to contact us at

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