Foreigners expected to pay for development bank

The Banca para el Desarrollo creates a way small businesses can obtain financing. The project has been approved by the legislature.

A little known fact is that the government is expecting to skim money from foreign capital leaving the country to finance the project. A proposed executive decree would implement the financial exit tax found in the law.

The proposed decree was prepared in the middle of last month, and La Gaceta, the official newspaper, published it Friday.

The seven-page decree is steeped in legalese, but it appears to say that both companies and individuals based in Costa Rica have to pay a tax of from 5 to 15 percent on money sent through the banking system to foreign accounts.

The payments specified include interest, commissions, dividends and other financial expenses.

The proposed decree says that the tax also applies to any purchases imported into the country.

When the measure originally was in the legislature, the tax was set at 5.5 percent the first year with increases to 15 percent over the next few years. The proposed decree does not contain this language.

The decree does not really say how the new tax would be put into practice. Many foreigners, including thousands of Nicaraguans, send money outside the country to relatives.

Also not addressed are financial transfers made by expats who might sell property here or simply decided to return to their home country and transfer their money there.

Foreign vendors are not going to accept a reduction in their payments, so the tax would become an extra expense of firms and individuals doing business here.

The decree is open for discussion on the section of the Ministerio de Hacienda Web page titled projectos.

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