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The Colones -
Dollar exchange rate changes
it will affect the
calculation of the minimum
amount that will activate
the VAT tax. /
A.M. Costa Rica wire services
photo
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Monthly
rent payment of ¢669,300+ colones
to be 13 percent more expensive on
July 1
By the A.M. Costa Rica staff
As of July 1, the Law of
Strengthening Public Finances will
come into force, creating the
Value Added Tax known as VAT that
applies in some property rental
prices.
The new tax will be due only when
the rental price is greater than a
Basic Salary multiplied by 1.5.
The Basic Salary amount is
₡426.200 colones this year. This
is a measure used by the
government as a reference for
calculating taxes or fines.
The reference amount for house
rentals is the Basic Salary
multiplied by 1.5 or ₡669.300
colones. According to the new tax
law, monthly house rents over
₡669.300 colones must pay 13
percent VAT tax.
Taking today's dollar exchange
rate of Banco Nacional of ₡587
colones for each dollar, a monthly
rental amount of $1,140 would
activate the VAT tax.
Landlord and
tenant must
know that if the Colones - Dollar
exchange rate changes it will
affect the calculation of the
minimum amount that will activate
the VAT tax. For example, in
October 2018, the exchange rate
was ₡620.64 colones per dollar.
The minimum monthly rent taxable
would have been $1,078 at that
time.
If a house monthly rent is
$1.500, VAT will be equivalent
to $195 (13 percent), then
new monthly rent tenant have to
pay is $1,695.
The landlord
is obliged by law to collect the
tax from the tenant and then
transfer it to the Ministry of
Finance by means of the tax
declaration. A sanction applies
if the owner does not collect
and remit the tax.
In addition, in case the landlord
does not want to collect the tax
from his tenants, he must assume
payment of the sum equivalent to
the tax.
The tax must also be charged on
the rental of premises for
commercial purposes (stores,
offices, bars, and clinics,
among others).
The renter should request that
the owner proved an electronic
invoice, approved by the
Ministry of Finance, detailing
the rental amount, the tax
amount being paid and the total
required payment.
If a rent is less than ₡669,300
colones per month, the tax is
not required. Rentals of under a
month do not activate the tax.
Companies or individuals that
have registered with the
Ministry of Economy or the
Ministry of Agriculture under
the classification of a small
company are exempt from taxes on
rent.
In upcoming editions, we will be
clarifying doubts about the new
VAT tax law.
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Do you rent a
home? If that is the case,
should you have to pay the
house rental VAT tax?
We would like to know your
thoughts on this story.
Send your comments to: news@amcostarica.com
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