If you own a home, condo or apartment that you rent to tourists, the taxmen at Costa Rica’s Ministry of Finance want 13%.
The message comes as reminder after a bill was presented to the Legislative Assembly on July 31st, aimed at cracking down on tax evaders, which specifically mentions those who own property used as vacation rentals must pay the standard 13% sales tax (IVI).
While the new bill is yet to be approved, the Director General of Taxation, Carlos Vargas is reminding property owners that the provision already exists in the existing General Sales Tax Act, and that tougher enforcement of the law is coming soon.
In the bill sent to the Legislative Assembly, a vacation rental is considered any accommodation rented for a period of less than one month.
“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.