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

Nearly Two Thousand Chinese Businesses Established in Nicaragua Since Free Trade Agreement Took Effect

Nearly 2,000 Chinese businesses have been established in Nicaragua during the first two years of the free trade agreement with China, according to the...

Local Elections Drove Costa Rica’s CPTPP Reversal, Sources Say

Concerns about the 2028 municipal elections helped drive Costa Rica's decision to abandon its bid to join the Comprehensive and Progressive Agreement for Trans-Pacific...

Djokovic Rallies in Paris to Keep ATP Finals Hopes Alive

At 39, Djokovic became the oldest match winner in Paris Masters history and kept his ATP Finals hopes alive.

Pope Leo XIV Departs for First Latin America Journey to Uruguay Argentina and Peru

Pope Leo XIV leaves Rome on Friday, November 6, 2026, for a twelve-day apostolic journey to Uruguay, Argentina and Peru. The Holy See Press...

Costa Rica’s First Direct Flight From Poland Lands in Guanacaste

Costa Rica's first direct flight from Poland landed in Guanacaste on Nov. 5, launching weekly LOT charters from Katowice through Dec. 17.

Alejandro Tabilo Falls to Rafael Jódar Again in Paris Masters Opener

Chile's Alejandro Tabilo suffered another disappointing defeat against Rafael Jódar on Monday, losing 6-2, 6-3 in the opening round of the Paris Masters as...

Democrats Win Congress but Costa Rica’s US Tariff Stays

Democrats won control of both chambers of the US Congress in Tuesday's midterm elections. The result hands President Donald Trump a divided government for...

National Geographic Names Costa Rica Central America’s Ultimate Nature Escape

National Geographic's new guide calls Costa Rica Central America's ultimate nature escape and maps six regions for travelers, as US arrivals slip.

5,000 Shareholders, No Dividends and a Court Order for Hospital CIMA’s Top Executive

A civil court in San José has ordered Clifton Neal Orme, the legal representative of Hospital CIMA, to appear in person and testify in...
Loading…

Latest News from Costa Rica

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