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As the world grapples with the pandemic of COVID-19, Costa Rica has joined other nations in providing relief in several areas. One of them is a new law providing some temporary tax breaks or deferral periods. In future Howler articles, we will talk about labor and social security measures that have also been recently approved.

On March 20, 2020, Law #9830 Alivio fiscal ante el COVID-19 (Tax relief related to COVID-19) was published in La Gaceta.

It is important to stay informed
of the various ways that
Costa Rica is helping to relieve financial burdens.

The most relevant aspects of this law are:

1. Partial payments of income tax for 2020

  • The taxpayers referred to in the Income Tax Law are exempt, for one time only, to make partial payments of the income tax that they should make in April, May and June 2020.

2. Deferral period on the payment of Value Added Tax (VAT):

  • VAT taxpayers must file, during April, May and June 2020, the tax return form D-104 for March, April and May 2020, and may not pay the Value Added Tax (VAT).
  • Taxpayers who take advantage of this opportunity must make the payments for the months covered by the deferral period no later than December 31, 2020, or make a payment arrangement with the Tax Administration, “Dirección General de Tributación,” to avoid incurring interest payments or fines under the conditions and terms defined in its regulations.

3. Exemption from VAT payment in commercial leases:

  • Commercial leases are exempt from paying the VAT for April, May and June 2020, only if both the lessee and lessor are registered as taxpayers in Registro Unico de Contribuyentes (RUC), Single Tax Registry of Dirección General de Tributación, the General Income Regime or the Special Agricultural Regime.

4. Deferral period on the payment of Selective Consumption tax:

  • Taxpayers of this tax, and who are registered in Registro Unico de Contribuyentes (RUC), Single Tax Registry of Dirección General de Tributación, must file their tax returns for March, April and May 2020, and may not make payment of the tax during April, May and June 2020.
  • Taxpayers who take advantage of this possibility must make the respective tax payments for the months covered by the deferral period no later than December 31, 2020, or make a payment arrangement with the Tax Administration to avoid incurring interest payments or fines under the terms and conditions defined in its regulations.

5. Deferral period on the payment of importation customs duties and taxes (impuesto selective de consumo):

  • Importers, and who are also registered as taxpayers in Registro Unico de Contribuyentes (RUC), Single Tax Registry of the Dirección General de Tributación, may nationalize the goods during April, May and June 2020 without paying the corresponding dues. Agricultural and livestock products classified from chapters 1 to 24 of the Sistema Arancelario Centroamericano are excluded from this measure and the national regulations will be maintained in the event of a possible shortage.
  • Taxpayers who take advantage of this possibility must pay the fees corresponding to the months covered by the deferral no later than December 31, 2020, or make a payment arrangement with the Tax Administration to avoid incurring interest payments or fines under the terms and conditions defined by the Customs Administration regulations.

Because this pandemic situation is evolving rapidly, it is important to stay informed of the various ways that Costa Rica is helping to relieve financial burdens. We are at your service to answer your questions and provide guidance at info@gmattorneyscr.com

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