On September 8, 2023, the Costa Rican Ministry of Finance announced the update of the list of foreign providers subject to the 13% Value-Added Tax (IVA) for digital cross-border 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 digital services contracted within its territory but provided by foreign companies with a 13% IVA. 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 the IVA applies when the provider is not registered as a contributor 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 IVA 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 the IVA. 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 increase in IVA may lead to a price adjustment in consumer consumption, especially for users who rely on subscription services. In addition, a possible reduction in the use of certain platforms by Costa Rican consumers who seek to avoid the increase in their expenses is expected.
Source credits: deultimominuto.com
