Report: U.S. Embassy owes $4 million in payroll withholdings

June 14^th, 2013 (InsideCostaRica.com) A report by CRHoy.com published yesterday revealed that the U.S. Embassy may be ¢2 billion (about $4 million USD) in arrears to the Family Allowances Fund (FODESAF).  FODESAF is a mandatory payroll withholding for both public and private employers.

However, the Embassy apparently believes that the mandatory withholding shouldn’t apply to a diplomatic mission.  CRHoy reported that embassy officials responded in an e-mail, asserting that “governments do not tax other governments. Under the Vienna Convention (Articles 31 and 34), diplomatic missions are exempt from fees or taxes to a host country. This applies to the U.S. Embassy in Costa Rica, as well as the Embassy of Costa Rica in Washington.”

However, under Costa Rica’s Law of Social Development and Family Allowances, all public and private employers and institutions must pay the monthly withholding.

The Head of Collections of the Department of Social Development and Family Allowances (FODESAF), Mauricio Donato, said that despite the fact that the Geneva Convention establishes certain exemptions for diplomatic bodies, that legal criteria exists in Costa Rica which would require the U.S. Embassy to make such payments.  Donato also mentioned that three other embassies have cleared their debts to the fund.