Costa Rican Chamber of Commerce called on the Executive and Legislative powers to Avoid New Taxes

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    With the announcement of the start of the second round of formal talks between the Government and the International Monetary Fund (IMF), next Monday, January 11, the Costa Rican Chamber of Commerce called on the Executive and Legislative powers to avoid new taxes.

    As part of the announcement, the Government invited the heads of political fractions from the different legislative parties to propose four options to choose from, new taxes, which would help to complete income equivalent to 0.4% of the Gross Domestic Product (GDP). This would be one of the last requirements requested by the IMF to carry out a financing agreement for the country.

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    The options would be:

    – Tax on bank transactions

    – Tribute to luxury homes with a value greater than ¢ 200 million.

    – Global income

    – Increase of 1% of the Value Added Tax (VAT) with refund to the two lowest deciles.

    Strong rejection

    However, in the commercial sector this maneuver aroused concern, since last year’s figures in areas such as commercial and economic activity, or unemployment, point to an increase in informality even greater than the current one, the Chamber argued.

    For example, last December the entity assured that the crisis caused by the COVID-19 Pandemic forced the closure of more than a thousand companies, of which more than 70% could not reopen.

    The economic contraction that was reported in October 2020 was -6.6%, according to the latest data published by the Central Bank of Costa Rica. For its part, the commercial sector suffered a reduction of -13.9%, according to the Monthly Index of Economic Activity (IMAC) of the same month.

    Even more worrying, for traders, is the growth of informal employment up to 19%, during the third quarter of last year. While the formal registered -3%. Currently, unemployment in the country is around 22%.

    Alternative solutions

    Instead of approving new taxes, the commercial sector asks the Executive to opt for alternative measures, which in its opinion, would help achieve the economic reactivation of the country.

    The main proposals they make to the State are:

    Measures at the level of the C.C.S.S. (effective hours, independent worker, etc.).

    Encourage business formality and promote the survival of new businesses.

    Reduce interest rates for SMEs in Public Banking.

    Reduce VAT withholding and rent with the payment of cards.

    Special deductible expenses and accelerated depreciation of assets.

    Improve development bank management, rethink the model.

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