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

Novak Djokovic Returns to Cincinnati With US Open History at Stake

Novak Djokovic will return to the Cincinnati Open in August, choosing one final hard-court tournament before resuming his pursuit of a record 25th Grand...

Costa Rica’s Romería Closes With Zero Deaths and 1,772 Medical Cases

Costa Rica's Romería closed without a single reported death, ending a nine-day emergency operation in which the Costa Rican Red Cross treated 1,772 people...

Costa Rica’s President Attends the Basílica Mass for the First Time Since 2023

President Laura Fernández attended Sunday's solemn Mass for the Virgen de los Ángeles in Cartago, the first Costa Rican head of state to take...

Trump’s Granddaughter Puts Guanacaste Beach Town in Front of 1.5 Million Viewers

A travel vlog posted last week by Kai Trump, the eldest granddaughter of U.S. President Donald Trump, has put a small stretch of Guanacaste...

Ride-app protest could slow your drive across the Valle Central this morning

If you have a flight out of Juan Santamaría today, a shuttle booked to the airport, or a drive between Cartago and San José,...

Costa Rica Expels Second-Division Club for 10 Years Over Match-Fixing

The Costa Rican Football Federation has thrown a second-division club out of the sport for ten years after its investigators concluded the team took...

Panama Named the World’s Best Country for Expats for a Third Straight Year

Panama has been ranked the best country in the world for people living abroad for the third consecutive year, according to the Expat Insider...

US Guarantee Letter Clears Final Hurdle for Macho Coca Extradition

The United States has delivered the written assurances Costa Rican courts required before Gilbert Hernán Bell Fernández, the Limón businessman known as "Macho Coca,"...

Costa Rica Police Report Links 116 Officers to Criminal Groups

A confidential police intelligence report has flagged 116 Fuerza Pública officers stationed along Costa Rica's southern border, describing alleged collaboration with drug trafficking, liquor...
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