By the A.M. Costa Rica staff

The Congress approved in the second (and final) round of voting the bill No. 21,637 that exempts from Value Added Tax, so-called IVA, on construction projects and related activities.

According to Congress, with this approval, the Law 9635, so-called "Law to Strengthen Public Finances" is modified to establish differentiated and gradual rates in the application of the tax to all engineering, architecture, topography and construction projects.

The 100 % tax exoneration is valid until August 31, 2021.

From September 1, 2021, to August 31, 2022, the tax rate will be 4%, increasing to 8% as of September 2022 until August 31, 2023. As of September 1, 2023, the tax will be 13%.

The modifications approved in the law must be signed by President Carlos Alvarado to allow the publication in the government newspaper La Gaceta. As of that publication, the VAT tax exemption may apply.

The  Chamber of Construction calls on the government to speed up the process of signing by the President for the publication, application and enforcement of the law.

"The implementation of this reform is urgent to generate a stimulus to investment, generate employment and promote more activity in the construction sector and in  the national economy in general, which will have a positive impact on the reactivation that the country requires in the face of the severe economic crisis that hits us," the Chamber said in its statement.

This is the second tax exemption approved by the Congress due to economic crisis.


In July, was  approved the bill No. 21934, known as the Tourism Sector Service Law.


Since the covid-19 national emergency, the tourism industry has fallen into crisis mode.

According to Congress, the new law modifies article No.26 of the current Sales Tax Law.

This adjustment allows all types of tourist services, by individuals or companies that are registered with the Costa Rican Tourism Institute, to be exempt from value-added tax, known as IVA, this year.

In addition, the law allows the tax to be gradually applied. As of July 2021, the tax will be 4 percent. And increase in July 2022 up to 8%, until reaching the 13% tax rate in July 2023.


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