1. Introduction to Costa Rica
Costa Rica, officially known as the Republic of Costa Rica, is a Central American country bordered by Nicaragua to the north and Panama to the southeast. It is renowned for its stunning natural beauty, including lush rainforests, pristine beaches, and diverse wildlife. With a population of approximately 5.1 million, Costa Rica has a rich history dating back to pre-Columbian times.
2. Recent Economic Developments
Costa Rica's economy has experienced significant growth in recent years, driven by sectors such as tourism, agriculture, and technology. The country has also made strides in promoting sustainability and environmental conservation, earning it a reputation as a leader in ecotourism.
One of the most recent and impactful economic developments in Costa Rica is the implementation of the "Ley de Fortalecimiento de las Finanzas Públicas" (Law to Strengthen Public Finances) in 2018. This law introduced a series of fiscal measures aimed at reducing the country's budget deficit and improving its fiscal sustainability. The law included measures such as increasing taxes on luxury goods, reducing tax exemptions, and implementing a value-added tax (VAT).
The implementation of the Law to Strengthen Public Finances has had a mixed impact on the economy. While it has helped to reduce the budget deficit, it has also led to increased costs for businesses and consumers. The law has also been criticized for its potential impact on economic growth and social welfare.
3. Tax Law Changes
In addition to the Law to Strengthen Public Finances, Costa Rica has also implemented a number of other tax law changes in recent years. These changes include:
- Introduction of a new income tax bracket: In 2020, Costa Rica introduced a new income tax bracket of 30% for individuals earning over ₡8.5 million (approximately $14,000) per month.
- Changes to the VAT system: In 2021, Costa Rica made changes to its VAT system, including increasing the standard VAT rate from 13% to 15% and reducing the number of goods and services exempt from VAT.
- Implementation of a new tax on digital services: In 2022, Costa Rica implemented a new tax on digital services provided by non-resident companies. The tax is levied at a rate of 15% on the gross revenue generated by these companies in Costa Rica.
These tax law changes are aimed at increasing government revenue and improving the country's fiscal position. However, they have also raised concerns among businesses and consumers about the potential impact on economic growth and affordability.
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