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Costa
Rican Government Resurrects Tax
Reform Debate
By Mike Godfrey, Tax-News.com,
Washington
The government of Costa Rican
President, Oscar Arias, is
working on new taxation
proposals affecting
corporations, financial
institutions and individuals,
and is soon expected to submit
new plans to the national
assembly.
While details of the new plans
are at present vague, it is
thought that the proposals
include some elements of the
fiscal reform bill which was
killed off by the constitutional
court earlier this year after
languishing in the Legislative
Assembly for four years.
Arias, who was elected earlier
this year by a slender majority,
is known to be a supporter of
the tax reforms, although he is
likely to introduce a slimmed
down version of the original
bill.
One of the aspects of the plan
which is expected to survive is
the introduction of value added
tax in place of the current
sales tax. It is thought that
VAT will be charged at the same
13% rate as the current sales
tax.
A report by Costa Rican online
daily AM Costa Rica suggests
that the government is also
considering a financial
transactions tax which will be
charged at five colons for every
1,000 colons, or 0.5%.
The government is also expected
to revamp the country's
corporate tax system.
However, it is unclear whether
the Arias administration will
proceed with a plan to introduce
global taxation, a major element
of the old fiscal reform bill.
At present, Costa Rica collects
tax only on income earned within
its borders, and some groups
fear that global taxation would
reduce the country's
attractiveness as an investment
base by deterring wealthy
foreign investors and retirees.
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