Developer has to pay tax on 79 corporations

I have been coming to Costa Rica for about 12 years, and were it not for the economy working against me, I would now be retired on the 125 acres I bought and started developing there in 2000.   I have already invested over $750,000 on this project, but like many investors, got blindsided by the financial factors around the world that I have no control over, and it has hurt badly, with no lot sales to help with expenses.  All infrastructure done, and segregations, permits, water concessions, all done and in hand, but no buyers.

Surprisingly, or maybe not so, the article I read in A.M. Costa Rica last week regarding proposals to generate more revenue included a plan to impose an additional tax or surcharge on flights coming into Costa Rica.   How could anyone possibly think that increasing the cost of a person, be it an investor or tourist, coming to the country is going to encourage this?  Flying to Costa Rica is already more expensive than are flights to many other destinations, and on top of the pricing, most of the flights from my area, Detroit, now involves an overnight layover for at least one connecting flight, generally on the return flight. When I started coming to Costa Rica it was at a cost of about $300 round trip, with total trip time under nine hours, with one connecting flight in Atlanta, Miami, or Houston, depending on the airline.  If I took a charter, it was non-stop from Detroit and I arrived in less than 5 hours.   The best rate I can find now is $891 per person with a return trip overnight layover to add to the expense.  Why is tourism down?!?

On top of the cost and hassle of getting a flight, the new tax on corporations means that developers — such as myself, who are not making any money because lots are not selling because of the economy and travel costs, and all the other problems in Costa Rica regarding negative publicity due to crime and bureaucratic problems, and the generally higher costs than elsewhere involved in trying to do business. — still have to pay the existing taxes, water and electric bills, labor to maintain the project, cost of accountants and attorneys and managers, and all the related expenses.

Now, with corporations already formed for those lots, based on the advice of the Costa Rica attorneys and real estate agents, small developers will be forced to try to figure out how to pay even more, in my case this would be an additional expense on 79 lots of $23,700 a year, with nothing coming in to help pay for this without lots selling.   This will be an impossible amount for me to pay.  Not all developers are rich as Ticos think we all are, and in my case, I have already invested my life savings on this project.  Not much thanks for the boost my investment has given to the local economy, using all Costa Rican labor, materials, and so forth, not to mention the cost of all the permit fee’s, water concession fee’s, and so on, that went to the government.

This new tax is absolutely a slap in the face, and something I cannot possibly afford to pay.  Therefore, a project that was to have 79 homes with people living there and spending their retirement money on goods and services and existing tax’s, and employing locals to build, with materials from local suppliers, and still paying all the current taxes and fee’s is going to have to be closed.    Sounds like the government’s version of an old Steely Dan song, “Pretzel Logic.”   Talk about killing the goose that is laying the golden egg!!!

Silly me, investing in, and spending my golden years in peaceful, and  beautiful Costa Rica seemed like a good idea years ago.

Jim Day
East Lansing, Michigan
and Libertad, Guanacaste

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