Costa Rica upholds tax breaks for electric cars, solar panels

Costa Rica’s Attorney General has ruled solar panels, efficient bulbs and electric vehicles will maintain their tax exemptions.

“We celebrate that this exemption is maintained. The transport sector is key in our National Decarbonization Plan and the incentives of the electric transport law are key in the objectives toward electric mobility,” said the Vice Minister of Energy, Rolando Castro.

These products are exempt from 13% sales tax by law 7447, in the case of bulbs and panels, and law 9518, in the case of electric cars.

With the July 1 change of sales tax for a value-added tax (VAT), the Ministry of Finance had consulted the Attorney General to determine what would happen to these exemptions.

The Attorney General, however, interpreted that the new VAT law does not repeal the previous tax law, but rather modifies it. That is why, according to the resolution, “it can not be understood that exemptions from the so-called sales tax granted by other laws have been tacitly repealed.”

“It should also be clarified that the exemptions from sales tax that were granted for terms determined under Law 6826 remain in effect,” the Attorney General’s Office said in its ruling.

The incentives for electric cars came into force less than two years ago, in February 2018. After a year of exemptions, imports grew almost sixfold, according to data from the Treasury.

In 2018 alone, more electric vehicles entered the country than had entered over the previous seven years combined.

According to the President of the Environment Commission of the Legislative Assembly, Paola Vega, the resolution also gives the assembly the task to make an “authentic interpretation” to leave the picture even clearer.

“We will proceed as soon as we return from vacation to make that authentic interpretation and everything will remain the same,” the deputy said.

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This story was originally published by Semanario Universidad on July 5, 2019. It was translated and republished with permission by The Tico Times. Read the original report at Semanario Universidad here.