No menu items!

COSTA RICA'S LEADING ENGLISH LANGUAGE NEWSPAPER

HomeArchiveTourism-Sector Tax Breaks Suspended

Tourism-Sector Tax Breaks Suspended

A lengthy battle between the Costa Rican TourismInstitute (ICT) and the Comptroller’s Office has taken aturn against the tourism industry as the institute wasforced to rescind tax exemptions previously granted tocar-rental companies, hotels and other tourism-relatedbusinesses.The exemptions, which had been in place since the1980s, allowed for the tax-free import of products suchas cars for rental companies, microbuses for travel agencies,and lamps and kitchen utensils for hotels.The order by the Comptroller’s Office to suspendthese tax breaks could have significant consequences for the industry, according to private-sectorleaders.TOURISM Minister Rodrigo Castro,who heads the ICT, said the Jan. 20 decisioncould deprive Costa Rica of foreigninvestment – something Castro and otherindustry leaders say is crucial if the countryis to keep up with its rapidly increasingnumber of visitors. Approximately 1.5 milliontourists visited the country last year, a20% increase over 2003 (TT, Jan. 7).“If another neighboring country offers(business owners) a series of conditions andadvantages much more favorable than thosethat we offer, that investment will go somewhereelse,” Castro said in a statement.One such neighbor and competitor,Nicaragua, is studying a legislativereform measure that would expand tourismincentives and benefits to small businessesin that country.Costa Rica’s Tourism Minister saidchanging the rules for businesses has adetrimental effect on investment as well.“The regulatory certainty of this countryshould be permanent, it should be clear,it should be stable… so that the investorfeels calm about coming to invest here. Wecan’t change the rules of play for investorsconstantly,” Castro said.OTHER business leaders said thedecision will have a direct effect on thequality of tourist services.“We’re astonished and annoyed,” AnaGabriela Alfaro, executive director of theCosta Rican Chamber of Hotels, told TheTico Times Monday. She said theComptroller’s handling of the decision,which she called “almost perverse,” couldcause many hotels to close.“Prices for the consumer would goup,” she said. “The quality of tourist serviceswould decrease.”“This decision paralyzes the process ofimproving infrastructure and the quality ofnational tourism services,” said CarlosRoesch, president of the Chamber ofHotels, in a statement.Carlos Ruíz, commercial director forthe Hotel San José Palacio, said the decisionis “worrying” and could affect existingand future investments here.Actions like this one, Ruíz added,“make those in the hotel and rental carindustries think about whether it’s worthit… to maintain an investment here.”THE disagreement at the heart of theconflict is whether the Tourism IncentivesLaw exempts companies from taxes indefinitely,or only for a defined initial period.The ICT has argued the former interpretation,and the Comptroller’s Office has chosenthe latter.Roesch said the Comptroller’s recentdecision is all the more surprising giventhat in 1999, the Constitutional Chamberof the Supreme Court (Sala IV) “concludedthat the Tourism Incentives Law doesnot have an established time frame.”Roesch’s statement called on theTourism Institute to consult the Ombudsman’sOffice for an analysis of the decision.According to ICT spokesman AlvaroVillalobos, the institute is currently studyingits options for legal action against theComptroller’s Office.

Trending Now

Costa Rica’s Ethanol Gasoline Plan Faces New Delay

Costa Rica’s plan to begin selling gasoline mixed with ethanol is still moving forward, but drivers may have to wait longer than expected before...

What Costa Rica’s Weather Looks Like This Week as an Early Dry Spell Sets In

Costa Rica goes into the first week of July under a markedly dry and windy pattern across the Pacific and the Central Valley, as...

Jacó Mayor’s Red Zone Plan Sets Off Backlash Across Costa Rica

Garabito Mayor Francisco González has started a national backlash after proposing a 70-hectare “permissive area” in Jacó where sex work, nightlife and eventual regulated...

Costa Rica’s Largest Drug Operation Heads To Court

Costa Rica's largest-ever anti-narcotics operation moved from raids into the courtroom as prosecutors said they would seek preventive detention and other precautionary measures against...

Costa Rica’s Route 27 Contractor Faces Nearly $100 Million in Possible Fines

The Route 27 sinkhole that has disrupted traffic for more than a month is now part of a broader accountability fight over one of...

Latin American Players Bring New Grass-Court Momentum Into Wimbledon

Francisco Cerúndolo has given Latin American tennis its clearest grass-court statement of the summer, turning a historic Queen’s Club title into a broader Wimbledon...

Costa Rica’s Small Hotels Face a New Era as Big Chains Expand

Drive the coastal corridor near Liberia's airport today and you'll pass a Four Seasons, a Westin, an Andaz, a Ritz-Carlton Reserve, and a Planet...

Costa Rica Seeks Interpol Help After Suspects Leave Before Raids

Costa Rican authorities have turned to Interpol to locate two women linked by investigators to the Riverside case, including the wife of extradited alleged...

Costa Rica Rounds Bus, Taxi and Toll Fares as the ₡5 Coin Exits

Hundreds of bus fares, along with selected taxi, train and toll charges, will shift up or down by a few colones starting July 1,...
Avatar
🌴 The Weekly Pura Vida

Costa Rica, Once a Week

The week's top stories, weather & insider tips — delivered every Sunday. One email, zero clutter.

🔒 Free. No spam. Unsubscribe anytime.

Loading…

Latest News from Costa Rica

Costa Rica Coffee Maker Chorreador
Costa Rica Car Rentals
Costa Rica Travel Insurance
Costa Rica Travel