Costa Rica: San JoséFlamingo Tamarindo Nosara


Value added tax (VAT) modification on tourism due to Covid-19

September, 2020

The Costa Rica government continues to adjust to the financial implications brought on by COVID-19. To help stimulate future tourist spending as the country gradually reopens for foreign visitors, on August 19, 2020, the law N. 9882 was published in 'La Gaceta'. 
Law 9882 modifies the transitory IX's first two paragraphs, of the Law to Strengthen Public Finance, Law 9635, that refers to the Value Added Tax (VAT) which must be applied to tourism services rendered by those duly inscribed in the Costa Rican Institute of Tourism (ICT).

This law establishes a gradual change in the VAT and provides a tax payment savings that ultimately reflects in a cost reduction in what tourists would pay for tourism services.  The law doesn't exonerate the tourism sector from the VAT indefinitely, but does provide reduction over a period of time as described below:
From July 1, 2020 to June 30, 2021 (inclusive) will be exempt of the VAT tax.
From July 1, 2021 to June 30, 2022 (inclusive) a rate of 4% VAT.
From July 1, 2022 to June 30, 2023 (inclusive) a rate of 8% VAT.
From July 1, 2023 forward, all tourism services will be taxed at the general rate of 13% VAT

Also, a final paragraph is added to Article 26 of Law 9635, Strengthening of Public Finance, as follows:
'Article 26 - Tax credit in operations subject to a reduced rate:
In all cases of international air transport services, included in Article 11 Point 1, the taxpayer will have the right to a full tax credit in the purchase of goods and services related to the provision of the service at a reduced rate.'
If you operate a tourism service business and would like further details or guidance on this helpful modification in the VAT, we are at your service at

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