The Legislative Assembly approved Law #9911, 'Law for the Relief of Payment of the annual circulation tax for a vehicle Tax 2021' on October 29, 2020.  This was published in the official newspaper La Gaceta on October 30, 2020.

 

This law adds an IV transitory to Law #7088, 'Tax Adjustment and Resolution Law 18 A'.  The objective is for the Ministry of Finance to reduce the amount to be paid for the annual circulation tax for a motor vehicle tax in 2021.

 

The reduction in tax will be applied as follows: 

50% reduction:

Private vehicles with a tax value of up to 7 million colones.

Light weight vehicles with a tax value up to 15 million colones.

Vehicles in the heavy load, vans, buses, tourism, agricultural machinery, rental cars and public services categories.

25% reduction:

Private vehicles with a tax value between 7 million colones and 10 million colones.

15% reduction:

Private vehicles with a tax value between 10 million colones and 15 million colones.

Additionally, motorcycles with a tax value under 1 million colones will be exempt from the Added Value Tax (IVA).

No reduction will be applied to the following and must pay 100% of the annual circulation tax for a motor vehicle tax:

Ships and aircrafts

Private and light weight vehicles with a tax value of over 15 million colones.

Vehicles of senior officials of the Public Administration.

If you own a vehicle and would like further details or guidance on this helpful reduction in the 2021 Marchamo, we are at your service at info@gmattorneyscr.com

Value Added Tax (VAT) modification in the construction sector due to COVID-19 

The Costa Rica government continues to adjust to the financial implications brought on by COVID-19. To help reactivate construction activity, due to the national and worldwide decrease in construction, on September 16, 2020, the law N. 9887 was published in the official newspaper 'La Gaceta' N. 230.

 

Law 9887 adds a new transitory V bis to law N. 9635, Strengthening Law Public Finance, to Promote Economic Reactivation, and its reforms, establishing reduced rates for engineering, architecture, topography services and civil works construction when such services are provided to projects that are duly registered before the Costa Rican Engineers and Architects Association (CFIA).

The law doesn't exonerate the construction sector from the VAT indefinitely, but does provide reduction over a period of time as described below:

 

From September 16, 2020 to August 31, 2021 (inclusive) will be fully exempt from the VAT.

From September 1, 2021 to August 31, 2022 (inclusive) a reduced rate of 4% VAT.

From September 1, 2022 to August 31, 2023 (inclusive) a reduced rate of 8% VAT.

From September 1, 2023 forward, these services will be taxed at the standard rate of 13% VAT.

 

If you operate a business within the construction sector and would like further details or guidance on this helpful modification in the VAT, we are at your service at info@gmattorneyscr.com