The Costa Rican government continues to adjust to the financial implications of COVID-19. The relief measures outlined below pertain to the construction sector and the annual vehicle registration tax, respectively. Information on other pandemic-related tax modifications may be found in previous LegalEase articles at


Value Added Tax (VAT) modification in construction sector

To help reactivate construction activity, due to the national and worldwide decrease in construction, the law N. 9887 was published on September 16, 2020 in the official newspaper “La Gaceta” N. 230. 

Law 9887 adds a new transitory V bis to law N. 9635, on Strengthening of Public Finance, to Promote Economic Reactivation, and its reforms. It establishes reduced rates for engineering, architecture, topography services and civil works construction when such services are provided to projects that are duly registered before the Costa Rican Engineers and Architects Association (CFIA).

The law does not exempt the construction sector from the VAT indefinitely, but provides tax rate  reductions for the applicable services over the following time periods:

  1. September 16, 2020 to August 31, 2021 (inclusive) — fully exempt from the VAT
  2. September 1, 2021 to August 31, 2022 (inclusive) — reduced rate of 4% VAT
  3. September 1, 2022 to August 31, 2023 (inclusive) — reduced rate of 8% VAT
  4. September 1, 2023 forward — the standard rate of 13% VAT

If you operate a business within the construction sector and would like further details or guidance on this helpful VAT modification, we are at your service at


2021 Marchamo (annual circulation tax for a motor vehicle)

On October 29, 2020, the Legislative Assembly approved Law #9911, “Law for the Relief of Payment of the Annual Circulation Tax for a Vehicle Tax 2021.” This was published in the official newspaper La Gaceta on October 30, 2020.

This law adds an IV transitory to Law #7088, Tax Adjustment and Resolution Law 18 A. The objective is for the Ministry of Finance to reduce the amount payable for the annual motor vehicle circulation tax in 2021.

The reduction in tax will be applied as follows:


50% reduction

  1. Private vehicles with a tax value of up to 7 million colones
  2. Lightweight vehicles with a tax value up to 15 million colones
  3. Vehicles in the heavy load, vans, buses, tourism, agricultural machinery, rental cars and public services categories

25% reduction

Private vehicles with a tax value between 7 million colones and 10 million colones


15% reduction

Private vehicles with a tax value between 10 million colones and 15 million colones

Additionally, motorcycles with a tax value under 1 million colones will be exempt from the Added Value Tax (IVA).

No reduction will be applied to the following, which are subject to 100% of the annual circulation tax for a motor vehicle:

  1. Ships and aircrafts
  2. Private and light weight vehicles with a tax value of over 15 million colones.
  3. Vehicles of senior officials of the Public Administration.


If you own a vehicle and would like further details or guidance on this helpful reduction in the 2021 Marchamo, we are at your service at

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