Costa Rica puts off VAT collection to foreign OTTs

Nogui Acosta, Costa Rican Finance Vice Minister, informed that the Value Added Tax (VAT) will not be charged to foreign OTTs that provide their services in the country from July 1st. Acosta anticipated that digital platforms will be taxed with VAT (valued at 13%) in the future, but it is still not defined which  OTTs will be affected and how the collection will be made.

Giovanni Tencio, Taxation General Vice Principal in Costa Rica, explained that the problem arises when entrusting card issuers with the tax collection in foreign OTTs, which ‘would have no way of verifying in which country the digital platforms are being used’.

The Costa Rican Finance Ministry held last week a draft of the VAT regulation, where it showed how it would charge the tax on digital platforms. There, the agency established that “the tax of 13% must be collected by the application to the user and then submit it to the Treasury when presenting the tax declaration’. In addition, the agency anticipated that it would contemplate credit cards or  digital platforms providers as means of payment of the tax.