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HomeCosta RicaCosta Rica's Tourism Sector Struggles with VAT Increase

Costa Rica’s Tourism Sector Struggles with VAT Increase

The prices of tourist services in Costa Rica have recently seen an increase as the value-added tax (VAT) rose from 8% to 13% starting July 1, following the staggered charge established by the Fiscal Plan.

This change comes as a result of the end of the differentiated tax regime established in Law No. 9882. Unfortunately, this increase in VAT has raised concerns within the tourism sector, as it makes products and services more expensive, potentially reducing the country’s competitiveness compared to other nations in the region.

The tourism industry, which is still in the process of recovering from the impact of the pandemic, fears that this price hike will further hinder its full recovery. Shirley Calvo, the executive director of the National Chamber of Tourism (CANATUR), acknowledges that while they were aware of the VAT increase, the timing is unfavorable. Operating with losses over the past two years, the sector is concerned about passing on this additional tax burden to the final consumer.

Representatives from various tourism-related associations express their discontent with the VAT increase. The president of the Association of Tourist Transporters of Costa Rica (ASTRONATUR) describes it as “painful” for both businesses and consumers, emphasizing that it will take a toll on the tourism sector’s finances.

The tourism industry, which includes tour operators, travel agencies, and tourism transport companies, will be subject to the 13% VAT charge. Alvaro Arguedas, the president of the Tour Operators Association (ACOT), hopes that the authorities will understand the challenges faced by the sector, which is still reeling from the devastating effects of the pandemic.

Throughout the pandemic, the tourism sector has repeatedly sought assistance from the government. It is an industry that suffered a significant blow, impacting thousands of families, particularly those in rural areas who rely on tourism for their livelihoods. Recognizing the importance of the tourism sector as a vital economic driver, industry stakeholders urge the prompt implementation of comprehensive solutions to address the challenges they face.

As Costa Rica continues to recover and attract more tourists, industry representatives emphasize the need for support and understanding from the government. They believe that in order to sustain and further develop the tourism sector, it is crucial to address the impact of the VAT increase and work towards comprehensive solutions that will enable a full recovery for the industry and its associated businesses.

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