Digital Services that Will Pay VAT from October was Reduced

They went from 108 to19

From 108 to 19 was reduced the amount of cross-border digital services with which the collection of the Value Added Tax (VAT) for said sector will begin, as of October 1.

The General Directorate of Taxation, of the Ministry of Finance, published a new resolution on September 22, in which it ordered the change to start the application of the tax with a fifth of the services provided until last July.

Specifically, the resolution contemplates:Airbnb, Apple +, Apple Music, Dropbox, Facebook, Facebk, HBO, ITunes, LinkedIn, Microsoft, Netflix, Nintendo, Norton, PlayStation, Riotgames, Sky, Spotify and Stream games.

In its resolution, Taxation argued that the banking sector, in charge of making a large part of the tax withholdings, requested that the collection begin with suppliers “that concentrate the largest transactional volume”, so that “the remaining suppliers are gradually incorporated”.

This would have been requested by the Costa Rican Banking Association and the Chamber of Banks and Financial Institutions of Costa Rica, “in order to prevent computer systems from producing response times that exceed the parameters set by the industry and performance can be monitored and the improvements in a controlled environment.”

However, Taxation also indicated that “later, the length of the list would increase”, as the retention mechanisms necessary to apply each case are refined. On this occasion, mobility and freight transport platforms such as Uber, Uber Eats, Didi, Glovo and Rappi, among others, were excluded.

The tax was to take effect on July 1st; However, the date was postponed until October 1st, as public and private banks argued technical difficulties to apply the amount on time. Faced with this situation, the Treasury gave a three-month extension to order the systems or, failing that, allow retention by the same companies.

The Minister of Finance, Elian Villegas, has said that it is still early to determine what the collection capacity of the new tax is; however, in the recent proposal document to the International Monetary Fund (IMF) an annual estimate of 0.03% of GDP was included; that is, about ¢ 10,300 million.

Also, Minister Villegas had stated that it is a tax whose performance should increase over time, given increases in business rates and a greater reception of this type of services by the population.

The Treasury reminded the public that no company can charge more or less than 13% of the rate for the new tax. This was reiterated by the General Director of Taxation, Carlos Vargas, on August 3rd, when the Netflix company announced, by mistake, that it would charge 19% for the tax.

Resonance Costa Rica