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 Sharks Get Cameras Built by Stanford Students

Scientists at the University of Costa Rica have strapped small cameras to nurse sharks in a protected Guanacaste bay, and what the animals are...

Shelton Reaches First Grand Slam Final After US Open Comeback

Ben Shelton moved within one victory of ending a 23-year wait for an American men’s Grand Slam singles champion after beating Frances Tiafoe on...

Costa Rica Independence Day Brings Street Closures and Afternoon Storms

If you are heading to an Independence Day parade in San José this morning, go early and keep an umbrella handy for later. Streets...

Costa Rica Health Workers Plan Nationwide Strike Over Unpaid Salaries

Health workers across Costa Rica are preparing for a nationwide strike tomorrow as problems with a new payroll system continue to leave some employees...

AI data center planned for Limón sits on wetlands, forest and aquifer zone

Official records show the site of the proposed Quantum AI Free Zone Campus in Limón holds three registered wetlands, forest cover, flood-prone land and part of an aquifer reserve.

Costa Rica Dollar Exchange Rate Falls to Another Record Low

The U.S. dollar has fallen to its lowest level on record against Costa Rica’s colón, extending a decline that is increasing the purchasing power...

Costa Ricans Back Fernández but Most Say Chaves Still Calls the Shots

President Laura Fernández has passed her first 100 days in office with the approval of nearly two-thirds of Costa Rica. She has also passed...

Cartago Reverses Business Closure Order for Independence Night

Cartago has withdrawn its Independence Day business closure order, and the Security Ministry now says the decision was never its to make.

Magnitude 5.3 Costa Rica Earthquake Shakes The Southern Pacific Before Dawn

A magnitude 5.3 earthquake shook the southern Pacific region of Costa Rica early this morning, surprising residents there and in parts of the Central...
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