Costa Rica: Reduced VAT on goods in “basic tax basket”; credit for general sales tax on commercial vehicles repealed

Products included in the list will be subject to value added tax at a 1% tax rate

Products included in the list will be subject to value added tax at a 1% tax rate

Executive Decree Number 43790-H-MEIC-S lists the goods that are part of the “basic tax basket” for the comprehensive welfare of families (CBTBIF). The products included in the list will be subject to value added tax (VAT) at a 1% tax rate starting from 1 February 2023.

The list of products is made based on food selection criteria, nutritional components of all food groups, articles, cleaning products, personal hygiene products that protect the income and expenses of households in the first three deciles of economic income.

The decree changed some of the products that are included in the list. For example, fruits such as sweet orange, soursop, “cas fruit” (or Costa Rican guava) and sweet lemon were excluded. On the other hand, tomato sauce and different types of fish were included in the list.

In relation to the reduced rate, the decree provides:

  • Application of the VAT rate of 1%: This rate will apply to those goods of greater consumption, in the population group corresponding to the 30% of lower income per household.
  • Agricultural Producers: Agricultural producers will be able to purchase the goods and services at the VAT reduced rate of 1%, provided that the service is directly related to the goods included in the current list, or an input of the goods included.

Credit for general sales tax on commercial vehicles repealed

Resolution Number DGT-R-34-2022 of the General Directorate of Taxation (DGT) repeals the Resolution Number DGT-R-23-2014 "Determination of the tax credit of the General Sales Tax for the acquisition of vehicles that are subject to the application of the Value-Added Margin.”

The revoked resolution established the requirements for taxpayers to credit the general sales tax paid on the importation of vehicles used for the commercialization and distribution of goods.

The resolution was repealed because the general sales tax was reformed by the VAT, which now establishes the conditions for the accreditation of the VAT in these cases.

Read a November 2022 report prepared by the KPMG member firm in Costa Rica


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