On September 8, 2023, the Ministry of Finance of Costa Rica announced the update of the list of foreign providers subject to the 13% Value-Added Tax (VAT) for cross-border digital services. The measure affects 181 platforms, including ChatGPT, Claude, Grok, Booking.com, Agoda.com, Expedia, TikTok, PlayStation Network, and Nintendo.
Context of the tax
Since October 1, 2020, Costa Rica has taxed 13% VAT on digital services contracted within the territory but provided by foreign companies. The update aims to adapt to technological dynamism, incorporating new services not contemplated in the original resolution, such as those related to artificial intelligence and online travel.
How it will affect consumers
For users, the difference will be direct: the price of the subscription or purchase will increase by 13%. Víctor Carvajal, vice minister of Income, explained that VAT applies when the provider is not registered as a taxpayer in Costa Rica and the transaction is made with a credit or debit card. An illustrative example: a monthly subscription of USD 20 will have a VAT of USD 2.60, resulting in USD 22.60, unless the tax was already included by the provider.
Notable example: Booking.com
The hotel booking platform is particularly relevant because it allows Costa Rican users to book both local and foreign accommodations. In both cases, the final service could be outside the country, but the fact of contracting it from the Costa Rican territory implies the payment of VAT. This means that even when booking a hotel in the United States, the subscription to Booking.com from Costa Rica would be taxed.
Technology and entertainment sector
- Artificial intelligence: OpenAI/ChatGPT, Anthropic, and Grok.
- Travel and accommodation: Booking.com, Agoda.com, and Expedia.
- Entertainment and video games: PlayStation Network, Nintendo, and TikTok.
The Ministry of Finance stated that the inclusion of these services responds to the need to reflect technological evolution and ensure tax equity between local and foreign companies.
Consequences and expectations
The VAT increase may lead to a price adjustment in consumer goods, especially for users who rely on subscription services. Additionally, a possible reduction in the use of certain platforms by Costa Rican consumers who seek to avoid the increase in their expenses is expected.
Credits: deultimominuto.com
