Costa Rican Chamber of Commerce Predicts Less Unfair Competition When Tax Exoneration for Internet Purchases Ceases

    A step in the right direction according to Tico commerce directives

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    The Costa Rican Chamber of Commerce celebrated the adoption in the country of the fourth version of the Central American Uniform Customs Code (Cauca IV) as of May 1st and described it as “a very important step for Costa Rica.”

    The implementation of this regional regulation seeks to harmonize the country’s customs system with the best international practices. That entails changes, such as the impossibility for Costa Rican consumers to continue exonerating taxes for products purchased online, up to $ 500.

    Despite the fact that the news has aroused unease among people who resort to exoneration, the trade union applauded the dismissal because it considers that formality is sponsored in the commercial sector and eliminates situations of unfair competition.

    This was explained by the economic advisor of the Chamber, Jairo Mena. “This measure is based on the best international practices and seeks to reduce the existing loopholes for the introduction of merchandise that would end up being placed informally in the national market. With this, formality and tax collection are strengthened,” he said. Under the new guidelines, the option will only be enabled for products sent by direct relatives or, in effect, travelers who bring packed items from abroad, he added.

    Awaiting the methodology

    Mena said that only that the Chamber of Commerce is waiting for the Directorate General of Customs (DGA) to make a decision on the methodology it will implement for the verification of kinship relationships.

    He added that although article 258, of the General Customs Law, establishes spouses as well as the “ascendants and descendants in direct line of the first degree”, which can include brothers, brothers-in-law, uncles, nephews, in-laws, sons-in-law and daughters-in-law. However, he noted that there may be cultural situations to consider. Mainly, it highlighted the cases where the surnames changed, after a marriage, as happens in the United States.

    “No express rule”

    The Director General of Customs, Gerardo Bolaños, stated that the elimination of the exoneration will put an end to a practice that is carried out despite the fact that “there is no express rule” that allows it.

    “The current application is via a criterion that makes an interpretation, in my opinion, not so extensive and that is what is being applied. With Cauca IV, it is defined which goods are exempt from payment and are family shipments”, he explained.

    For his part, the legal expert on customs issues, Jaime Morales, reaffirmed the explanation offered by Bolaños, as well as by the union, regarding unfair competition. At the same time, he agreed that it is a measure that encourages formality. However, he recalled that the Government has the responsibility to offer adequate support. This, with the aim that people in the informal market can make the transition.

    “As a country we have to find a way to facilitate trade, something that is an international principle. Let everyone pay what they have to pay but let’s make all these processes easy. The important thing is to have the facility to import products and pay my taxes,” Morales added.

    Trade “ant”

    Both experts explained that although the amount established seems negligible, illegal trade in the country found, in the modality known as “ant”, is an unfair advantage. This means that informal companies use several people to exempt themselves from payments that, when added together, represent thousands of dollars.

    Bolaños did not offer a sum on the amount that the country has stopped receiving due to these instruments. However, in January 2018 the General Directorate of Customs attributed a year-on-year growth of 200% during the last four months of 2017, to this option.

    “It is not possible that, in the framework of the economic recovery, you buy a shoe, tax-exempt, and not in a store that pays taxes, to its employees, electricity. Unfair competition? Absolutely,” said the official.

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