The 2012 worldwide VAT, GST and sales tax guide

C. Who is liable
C OSTA RICA 135
A VAT taxpayer is any business entity or individual that sells taxable
goods (including imports and exports of goods) or that provides
taxable services on a regular basis. A permanent
establishment of a foreign business in Costa Rica may be a VAT
taxpayer.
No turnover threshold applies to VAT registration. As soon as a
taxable person begins a taxable activity, it must notify the VAT
authorities of its obligation to register. A taxable person that does
not notify the VAT authorities of its obligation to register may be
automatically included in the registry of VAT taxpayers.
Small taxpayers. A simplified VAT regime applies to small taxpayers.
The simplified regime applies to individuals who carry
out a limited range of activities, such as small retail activities,
including operating a grocery store or mini-market. To qualify as
a small taxpayer, the entrepreneur’s annual purchases may not
exceed ¢47,430,000 (approximately US$91,275) and the entrepreneur
may not have more than five employees. Under the simplified
regime, presumed taxable turnover is calculated by
applying an estimated profitability factor that is determined
based on the taxpayer’s business sector. The VAT rate is applied
to the presumed taxable turnover and the small taxpayer pays
VAT on that base.
Group registration. VAT grouping is not allowed under the Costa
Rican VAT law. Legal entities that are closely connected must
register for VAT individually.
Nonestablished businesses. A “nonestablished business” is a
business that has no fixed establishment in Costa Rica. In principle,
a nonestablished business must register for VAT if it supplies
goods or services in Costa Rica.
Late-registration penalties. A taxpayer that fails to register for
VAT on a timely basis cannot offset VAT credits generated from
purchases that at the time of registration are included in inventory.
Penalties and interest are also assessed for late registration for
VAT.
D. VAT rates
In Costa Rica, the standard rate of VAT is 13%. The standard rate
applies to the supply of all goods and to taxable services, unless
a specific measure provides for an exemption. Supplies of wood
are subject to a 10% rate, and the residential supply of electricity
is subject to a 5% rate.
In addition, some activities are exempt or zero-rated. In both cases,
no VAT is charged. However, unlike zero-rated activities, exempt
activities do not give rise to a right of input tax (see Section F).
The following table lists examples of exempt supplies of goods
and services (this list is not exhaustive).
Examples of exempt supplies of goods and services
Goods that form part of the “average weekly shopping” (a list of
items considered essential for the traditional household)
Veterinarian and agricultural products including livestock