August 28th, 2014 (InsideCostaRica.com) Beginning October 1st, banks must begin retaining 2% of merchant transactions using credit and debit cards as partial prepayment of businesses’ income tax, the result of an order issued by the Directorate of Taxation which was published in the official La Gaceta on August 25th.
The order applies to all merchants that accept credit cards, from neighborhood pulperias to hotels.
Business chambers have expressed concern about the effect of the measure on small businesses, some of which operate on a profit margin of 5% to 7%.
Ana Teresa Vasquez, executive director of the National Association of Retailers, said that retailers’ gross profit margin averages just 6%.
Some have expressed concern that the measure may lead small businesses to begin refusing credit and debit card payments or increase prices.
The 2% withholding is in addition to the normal transaction fees paid by merchants for processing credit and debit cards.