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    Costa Rica Will Not Charge a Tax on Luxury Homes From ¢ 108 Million

    Also proposing to raise the base for global income and tax on lottery prizes

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    The Costa Rican Presidential office sent this past Thursday the four alternative projects that it previously consulted with the International Monetary Fund (IMF), reversing the increase to the base that it wanted to make on the luxury home tax from ¢ 108 million.

    As explained by the Minister of Finance Elian Villegas, the proposed initiative considered a luxury house starting at ¢ 150 million, by adding the value of the construction and the value of the lot.

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    “Now what we are doing is using the mechanism of today, using the value of the construction to define if the house is luxury. So if the value of the house exceeds ¢ 133 million, the value of the lot is added to it and tax is paid on the entirety ”, indicated the Minister.

    This tax would be charged at a rate of 0.5% of the total value, that percentage does not change in the new bill. That increase in the rate (today they pay 0.25%) doubles the amount to be paid.

    Expanding the base

    In the proposal for the global income tax, (that is, a total charge for all the remuneration that the person receives), the new proposal expands the exempt base to ¢ 8.4 million.

    “The fundamental change is that what is known as the vital minimum, which is the part of the salary or income that is exempt, we are raising the amount that was in the project to the sum of ¢ 8.4 million, a little more than ¢ 700 thousand per month, that amount would be left without any tax being applied,” added Villegas. What the Government is looking for is that more wage earners pay the tribute and not independent workers.

    Lotteries

    The project that undergoes modifications is the one that seeks to put a tax on lottery prizes. In the first instance, it was sought to tax the prizes, which exceed half a base salary (¢ 225 thousand), with 25% of the games of chance that the Social Protection Board (JPS) sells, distributes or commercializes in the national territory. But the new text raises it to a base salary that is ¢ 450 thousand.

    “The replacement texts of these bills are the result of a technical effort by the Executive Power to address the observations that have been identified both in the legislative space and from the sectors, with the purpose of contributing to the discussion process to make their processing feasible. and approval, maintaining the expected performance in fiscal matters that allows maintaining the agreement with the IMF ”, explained Minister Geannina Dinarte.

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