August 13th, 2014 (InsideCostaRica.com) Costa Rican tax authorities said in recent days that they have begun scouring the Internet and social networking sites such as Facebook for those advertising vacation rentals in the country to ensure the owners of such properties are paying the mandatory General Sales Tax (IVI) of 13%.
Numerous sites exist online where property owners advertise their properties as vacation rentals. One of the most popular sites, VRBO.com, lists over 1,200 vacation rentals in Costa Rica.
Property owners also routinely advertise their vacation rentals on social networking sites such as Facebook and free classified sites like Craigslist.
The Director General of Taxation, Carlos Vargas, warned property owners earlier this month that tougher enforcement of the sales tax was coming soon.
“The idea is to prevent tax evasion and unfair competition by the proliferation of vacation rental properties that pay no taxes, against formal hotels and lodges that do pay taxes,” Vargas said.
“If we do not fight informality in this sector, the Treasury will continue to lose resources as the [informal accommodations] absorb the tourism market.”
Vargas said that vacation rental owners – most of which do not charge for or pay the sales tax – unfairly compete against hotels, which must pay sales taxes and social security contributions.
The Ministry of Finance said it is planning several new tactics to enforce compliance and detect evasion of the tax.
Tax authorities also shuttered ten businesses in a single week earlier this month for failing to pay the sales tax.