Costa Rica News – Interesting where there is some tax relief for the small and medium enterprises (SMEs) now.
The current government reformed a 43-year-old tax on motels catering to the ‘room-by-the-hour’ sort of establishments.
SMEs are struggling to break free under regulations that generally are dated and ineffective. This tax was 30% based on the checkout rate and was intended to limit the amount of sex, binge drinking and drugs that are typical activities at motels.
The tax is still in effect but instead of a flat 30% the tax is now tiered based on the size of the establishment at 13%, 10% and 5%, for the various sizes. These rates are much lower and will have a positive impact on the motels.
The tax was originally established in 1972 by the priest Armando Alfaro with the intent to finance the IMAS for programs to fight poverty.
It is an example of the non-separation of church and state that can complicate development for SMEs.