Tourism officials and business leaders say they are doing everything they can to stop a retroactive tax that they say could cripple Costa Rica’s tourism industry. A tax agency decree issued July 30 applies a 13 percent sales tax on entrance into protected areas for recreation centers and related activities, per the finance ministry’s open interpretation of the general tax law.
Officials say the retroactive tax would cost tourism operations billions of colons.
Pablo Heriberto Abarca, president of Costa Rica’s tourism chamber, said this new interpretation that targets tourist activities like canopy, rafting, and hiking is illegal and would provide a major blow to industry businesses. At a Wednesday press conference Abarca asked rhetorically if playing on a soccer field would soon illicit a charge from the government.
“The finance ministry doesn’t make clear what will be charged and what won’t be charged,” he said. “If they don’t have clarity, then how should we know what will be charged? It’s a mess.”
Abarca and the tourism chamber sent a letter to President Luis Guillermo Solís, requesting his intervention on the retroactive charge known as decree DGT-CI-06-14. Tuesday the chamber presented a petition to lawmakers in search of signatures and in hopes of creating an immediate action in the Asamblea Legislativa that would rescind the finance ministry’s decree.
According to a chamber release, the fine has already been applied to businesses in La Fortuna and surrounding areas. Around 10 local businesses were notified that they would not only have to pay the tax starting Sept. 30 but that they would have to reimburse the government for non-payment over the past three years, a retroactive tax that the tourism chamber estimated would be billions of colons.
Abarca said this added tax will make Costa Rica less attractive as a tourist destination when compared to its Central American neighbors, leading tour companies to provide less jobs or shut down operations entirely.
Rodrigo Valverde is the general manager at Costa Rica Sky Adventures in Monteverde, a zip lining and suspension bridge tour company that is affected by the retroactive tax.
He said having to pay this new tax would mean the business responsible for providing 200 jobs would have to fold. Valverde called the government’s decision irrational and said the initial tax law was not designed to target the types of activities his business offers.
“This could turn out to be the worst case scenario for tourism on a national level,” he said. Valverde added that this negatively affects Costa Rican families, whether they are involved on the business side or the consumer side of these recreational tours, even more than foreigners.
Tourism representatives argue that a Procuraduría General guideline from 1999 says that activities cannot be included in tax cases unless the law has an exclusive clause to the contrary. Abarca said that if something is not resolved soon within the Asamblea Legislativa or directly through the president then the tourism chamber will take legal action against the government.
“The sector is appealing this to the president so that he may contribute to the industry’s stability by completely blocking the retroactive charge,” he said. “This measure is disproportionate, unfair, confiscatory, and of immeasurable aggressiveness.”