Many in tourism exempted from 2% credit card bite

Tourism operators and travel agencies will not be subject to the 2 percent retention on credit and debit card transactions.

That was a decision of the Dirección General de Tributación that said average taxes paid by these sectors were far lower than 2 percent of their gross.

However, hotel operators will have credit and debit card transactions reduced by about 1.76 percent. The Cámara Costarricense de Hoteles sent out a message Tuesday that said hotels were exempt from the deduction, but the tax agency quickly said that hotels were not exempt.

The Ministerio de Hacienda activated an older law to decree that every credit card transaction would be reduced by 2 percent and that the card processors would remit that percentage to the tax agency. There were negotiations. The money is advanced payments on income taxes.

For example, the Asociación Costarricense de Operadoras de Turismo sought an exemption for its sector last Nov. 24. That prompted an internal study, said Tributación. The result was that the agency found that the average income tax payment by tourism operators and travel agencies was about 0.75 per cent, far lower than the 2 percent that would be withheld.

The tax agency said that to impose the surcharge would be a burden for the sectors.

The original 2 percent was reduced to about 1.76 percent to avoid withholding a percentage of sales tax that might be levied on the transaction. Sales tax is now 13 percent.

Only what the tax agency calls tourism operators and travel agencies are exempt, and other tourism activities still are subject to the retention. However, that difference is yet to be defined.

Some services, such as public transportation providers and taxis already were exempted by the original decree.

A lot of tourism operators and other businesses in Costa Rica use credit card processing services outside the country.

One such service is Pay Pal, which is in wide use here. These are unlikely to be affected by the decree.

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