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

El Salvador Fires School Leaders After Bukele Shares Gang Video

The Minister of Education ordered the dismissal of the director and deputy director of a public institute shown in a video shared by President...

Outrage in Costa Rica After Man Suspected of Killing 14 Dogs Is Released

A man identified by the surnames Ulloa Bustos, suspected of killing at least 14 dogs in the rural town of Pocora, was released after...

Guatemala Prisons Erupt in Violence With Guards and Workers Taken Hostage

Gang members rioted this Friday in two prisons in Guatemala and took several guards and civilian employees hostage, a week after uprisings in which...

Costa Rica Replaces One-Lane Bridges as Traffic and Population Grow

As the infrastructure of Costa Rica advances, with new four-lane highways and a series of bypasses around San José that avoid the narrow, congested...

Panama Sees Record Cocaine Flow Through Ports Bound for Europe

Panama’s President José Raúl Mulino on Tuesday criticized port concession companies in the Caribbean region of the country for the surge in drug trafficking,...

San Jose Airport Achieves Top 5 Global Ranking in Passenger Experience

Juan Santamaría International Airport in San Jose, Costa Rica's main gateway managed by AERIS, has earned the prestigious Level 5 Customer Experience certification from...
Avatar
spot_img
Costa Rica Coffee Maker Chorreador
Costa Rica Coffee Maker Chorreador
Costa Rica Travel Insurance
Costa Rica Rocking Chait
Costa Rica Travel

Latest News from Costa Rica