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

Grynspan Holds Lead as New Emirati Candidate Disappoints in Race to Lead UN

Former Costa Rican Vice President Rebeca Grynspan again finished first on Friday in the UN Security Council’s seventh informal vote in the race for...

Ruling Party Files Bill That Would Let Rodrigo Chaves Run Again in 2030

Legislators from Costa Rica's ruling Pueblo Soberano party filed a constitutional reform on Tuesday that would allow presidents to serve consecutive terms. Its backers...

Costa Rica’s Creepiest Ghost Stories and Mysterious Legends

Every society has tales of terror that challenge our imaginations and our courage. Costa Rica has folk tales that include a priest who lost...

Suspect in Playas del Coco Killing of American Will Be Held for One Year

A 22-year-old woman suspected of killing American businessman Marc Walter Fleming in Playas del Coco will remain behind bars for at least the next...

Expect Gusts Up to 85 km/h and Rain in Costa Rica This Weekend

Gusts could reach 85 km/h in Costa Rica's mountains and northern Guanacaste today, with rain in the Caribbean and storms in the South Pacific.

Costa Rica Pension Overhaul Could Require 30 Years of Work Instead of 25

Workers in Costa Rica's main public pension system could need five more years of contributions before they can retire, receive a smaller share of...

Costa Rica Court Asked to Halt Shark Fishing Near Cocos Island

A Costa Rican environmental attorney has asked a court to temporarily prohibit the capture of several types of sharks in waters surrounding Cocos Island,...

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.

Costa Rica Now Has Its Own Wine Grape After a 50-Year Quest

Costa Rica now has a wine grape of its own. Peppevidor, a hybrid bred to grow in tropical heat, was certified as a new...
Loading…

Latest News from Costa Rica

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