Pura Vida Sales Tax

Newsflash:  Even in the land of Pura Vida, hammocks, sloths, and umbrella drinks…the government can do things like passing new laws regarding sales tax.  And that is exactly what happened in Costa Rica in 2019.  You might not think a Costa Rica sales tax is a proper subject for a fun vacation blog, but we think you deserve to be informed as well as entertained, so check out this inside info on what to expect in today’s Costa Rica:  

Photo by Roberto Nickson

Costa Rican sales tax is referred to as IVA, which stands for Impuesto al Valor Agregado.  This tax itself is not new, although many things about the way it charged and reported are.  One thing that is new is that the 13% sales tax now applies not only to goods but also to services.  In the past, you would not have paid this tax on services like tours, transportation, or a private chef–but now you will, if the company that serves you is registered with the Costa Rican equivalent of the IRS.  

What’s not taxed?  Certain basic grocery items are tax exempt in Costa Rica, fuel is tax exempt, and medical services are tax exempt except if they are paid in cash.  Cash medical services are charged a 4% fee, but we’re counting on you not needing medical services during your vacation.

Hotel rooms and Tamarindo vacation rentals are taxed (not new) and meals in restaurants are taxed (not new).  Restaurants in Costa Rica are actually required to mark up their prices twice–they charge a 13% sales tax and a 10% service charge.  The service charge is not all bad news!  What it means is that your tip, or a part of it, is already included on your tab.  Tipping additional amounts was not a part of Costa Rican custom in the past, although in the places you’ll visit in Tamarindo, servers are used to receiving tips from happy customers.   Let’s say you buy a Tamarindo t-shirt or hop into an airport transfer shuttle van for 25$. If you don’t see sales tax added to the price on your receipt, this most likely means it is already included in the amount you’ve paid.

Photo by Maurits Bausenhart

It is possible that paying for things in cash could allow you small discounts in Costa Rica, but we don’t guarantee it.  This used to be the case across the board, but it is now only sometimes true.  A vendor who gives you a discount for cash is giving you back the difference of what s/he would have paid as a credit card fee if you had handed over plastic.  This is completely unrelated to the 13% sales tax, which you will pay the vendor and the vendor will pay the government either way.   

There you go.  A little bit of painless Costa Rican tax education to prepare you for your trip to Puravidaville, so that you’ll have as few unpleasant surprises as possible during your days in the sun.  Contact us now and let’s start planning.