Tourism chamber negotiates special deal on tax plan

The national tourism chamber has negotiated a special deal with the central government to phase in over three years the 14 percent value-added tax that is being considered by the legislature.

The chamber, the Cámara Nacional de Turismo, said that certain tourism purchases will be subjected to just a 4 percent tax during the first year that the levy is in force. The rate will be 10 percent during the second year. In the third year, the rate will revert to that which would be charged most other financial transactions, 14 percent.

The chamber is not happy about the compromise deal. Tourism officials wanted to phase in the tax over six years, and they wanted more tourism pursuits covered by the staged tax.

As it stands now, these tourism purchases will be subject to the lower tax in the first and second year: Rental vehicles, tricycles and quadracycles, travel agency sales, sales by tourism wholesalers, tourism guides, tourism transportation and activities like canopy tours, rafting, surfing, kayaking, boat travel, cable car rides and bungee jumping.

The chamber said that the deal would reduce the negative impact on the tourism industry. Not covered by the deal are admissions to national
parks and private reserves and certain walking activities.

Fernando Herrero, the minister of Hacienda who is Casa Presidencial’s point man for the tax plan, promised a break for tourism in a brief comment to a legislative committee last month. But he did not elaborate.

Determining the tourism status of persons who rent vehicles would seem to suggest that all such rentals would enjoy the lower tax.

The chamber said there were five rounds of negotiations with Hacienda staffers.

Other sectors also have cut special deals with Hacienda. However, all of these agreements could face changes during legislative action.

The tourism industry has taken a big hit, in part due to the economic situation in the north and in Europe.

However, the country did add a $15 tourism arrival tax and increased the exit tax by $2 to $28.

The chamber noted that tourism operators have suffered from the estimated 18 percent decrease in the rate of exchange between the colon and the U.S. dollar. Much of the tourism income is in dollars, but expenses are frequently in colons.

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