Coronavirus and Costa Rica’s Response

Unfortunately for many people worldwide, this Coronavirus has affected them in ways they never imagined. On a positive note, Costa Rica’s government has been diligent in taking action to protect the people of this beautiful country.

Costa Rica Minister of Health and PresidentAs I have written previously about the Coronavirus, including an update, and as a recap, the ports of entry have been closed to all foreigners up to at least April 12, 2020. Citizens and legal residents of Costa Rica are permitted in and will be quarantined for up to 14 days. They will go through a health check upon returning to the country at the point of entry and are required to give details of where they have been and where they live in Costa Rica.

Many planned events such as topes (Horse parades), festivals, sporting events, concerts, you name it, have been canceled so people are not gathering together and potentially spreading the coronavirus even further. Bars and night clubs were ordered closed. All restaurants are allowed to stay open but can only serve 50% of their total capacity.

All public and private schools are closed for the next two weeks, then there is the Semana Santa vacation, (Easter break) kids will be out of school for over 4 weeks. Many private schools have turned to on-line classes and work for students to continue their education.

As of writing this here is a link to the Costa Rica Ministry of Health website showing the confirmed cases in Costa Rica. Unfortunately, as of the 18th of March, there is one reported death. An elderly man of 87 years.

To help fight off the inevitable economic problems that will face Costa Rica, the Costa Rican Congress approved, in its first debate, the Tax Relief Project – COVID-19. Here is a rough break down of the draft.  I received this information from one of the largest and most trusted law firms in Costa Rica, Dentons Muñoz.

Deferral on the payment of Value Added Tax: Value Added Tax payments due on April, May, and June 2020, can be deferred until December 31, 2020, without the application of any interest or penalties The obligation to file Value Added Tax returns will remain unaltered.
Partial payment deferral (installments): Taxpayers will be authorized not to make partial Income Tax payments in April, May, and June 2020.  The deferral does not apply to taxpayers with a special fiscal period previously approved by the Tax Administration.  The deferral will not apply to other taxes regulated in the Income Tax Law (e.g., salary withholding, withholdings of remittances abroad, among others). Consequently, filings and payments must be made as provided by the current applicable regulations.
Deferral of the payment of Selective Consumption Tax: In the case of taxpayers registered at the Taxpayers Registry, the Project proposes a deferral of the payment of the tax for the months of April, May, and June 2020. The obligation to file the tax returns remains unaltered and the payment of the tax is postponed until December 31, 2020, without interest or charges.
Deferral of payment of customs duties: In the case of taxpayers registered in the Taxpayer Registry, they will be able to nationalize merchandise without paying tariffs during the months of April, May and June 2020.
Extension of the Deferral: Finally, the Executive Branch was authorized to extend the deferral for an additional month, to have tax payments due in July be paid by December 31, 2020.
Exemption on commercial leases: An exemption from the payment of 13% of the Value Added Tax was approved for the months of April, May, and June 2020, for the leases paid in commercial activities, as long as the lessor and lessee are registered at the Taxpayers Registry.

Validity: The publication is expected to take place by the end of the month, in which case, the measures listed above would enter into force in April. For this initiative to become a law, Congress must vote this a second time which is expected today March 19, 2020.

More updates to come. Be safe, be smart!! This shall pass.

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