What I love about Costa Rica: If you can beat the ants, there is free food lying in the ditch beside the road. Today we made breakfast while walking the dog. This mango was perfect.
A few months ago, the Costa Rican government told us to collect sales tax (venta) on our vacation rentals. There was a lot of controversy and arguments in the courts but finally all powers agreed that it was law. We started immediately to collect this tax and, since then, I have learned a few things about it.
1. It’s a lot of money. At 13%, it amounts to substantially more than I pay each year in income tax (renta) on my business. It’s a huge windfall to the government – no wonder they want it. If it goes to the right places, it can mean big improvements for the country. And I believe that a certain percentage of it is supposed to right back to my community. Does it? Well, that’s grist for another post but I believe that in time all will be revealed.
2. It doesn’t cost me a thing, except the 15 minutes a month I spend paying it on line. I collect the tax from my clients and pass it on to the government. And it’s mostly foreign money because most of our guests come from outside of Costa Rica. In fact, by collecting this tax, I feel I am contributing to my adopted home, besides the jobs I provide and the taxes I already pay.
3. Customers expect to pay it. Most of our guests come from places where sales tax is a given. Since we began collecting sales tax, no one has even questioned the tax, with the exception of one who, as you might expect, was Costa Rican. (Culturally, Ticos are not accustomed to paying taxes. I know many of you will argue with me but, compared with the US, Costa Rica simply doesn’t know how to pay or collect taxes.)
4. Not all businesses collect it and even fewer pass it on to the government. This is what I really want to talk about.
For many “under the radar” businesses, the feeling is that paying this sales tax will expose their operation to other taxes and scrutiny, which they prefer to avoid. They choose to defy the law and remain hidden. This puts them at an unfair advantage in the marketplace over hotels who pay it along with other associated fees and taxes.
But many “legitimate” businesses don’t pay either. When you look at your restaurant or bar bill, you may wonder what those two line items are: 10% service and 13% impuesto (tax) or venta (sales tax). Some bills include one or the other or both. It’s hard for most tourists to figure out.
a. My understanding is that the 10% service charge goes to the proprietor, not wait staff. I don’t get this, because the restaurant has, presumably, already set their prices to cover the cost of preparing and delivering food. But this is tradition here and there is not much way around it. I pay it then try to give the waiter something on the side. But I have seen the waiter in some establishments hand even that over to the proprietor. It’s a tradition that I don’t know how to fight.
b. The 13% sales tax, however, is law and should be charged only on a “Factura Contada”. Every business in Costa Rica is required to track their receipts on numbered invoices so that auditors can confirm they are paying appropriate taxes. If you don’t see a “Cedula” number (business ID) printed at the top of your bill and a red sequential number in the corner, it’s not a factura contada and you can be pretty sure that no tax is not being paid on this transaction. If they charge the 13% sales tax and don’t pay it, they are stealing from you.
5. It’s a win-win. Costa Rica can’t get ahead without tax money. (Neither can the US but that is not my subject today). So who are they going to collect it from? The government is constantly looking for new ways to get money from people who are willing to pay. We immigrants feel like the finger is always pointed at us. There’s the luxury home tax, the airport tax, the corporation tax, and the caja subscription that’s required for residency. So here’s a “new” tax that mostly doesn’t affect us. We’re already paying it when we buy things from legitimate businesses. Let’s help them collect it from the rest, mostly tourist businesses like restaurants, hotels, and vacation rentals. It might take some of the pressure off us immigrants – I refer you to point 1 above.
They’re putting up the stands.
Getting ready for the holidays in Playa Samara Beach means building the arena and bleachers for the traditional Corrido de Toros. This temporary arena is built fresh every year.
Ticos are a gentle people so they don’t so much fight the bulls as annoy them. Young toughs get into the ring and run around poking at the bulls to entice the beast to chase them so they are forced to climb the fence before being gored in the hiney. It’s somewhat entertaining to northerners who’ve seen an actual rodeo but it’s very popular with locals. Actually, my visiting nephew said it was the most fun he’s ever had for a buck. The carnival rides and eateries fill out the festivities which begin each day with a cannon shot and end the week with fireworks.
Two of my favorite people – Brookie and Lisa were some of my first readers when I started this blog in 2011 – are running one of my favorite businesses in Playa Sámara. Pura Paleta makes all natural gourmet popsicles that offer just the right mix of refreshment and self-righteousness; natural sweeteners like agave nectar and raw honey are used only in the flavors that need them like Blackberry Ginger Limeade. These pops combine whole tropical fruits and fresh herbs for very interesting flavors and thirst-quenching, not too sweet frozen treats. Pineapple Cilantro Lime and Mango Ginger Mojito are two of my favorites.
Pura Paleta started producing pops and selling them on the street a little over a year ago. This high season in our little beach town, they’re opening with a new “permanent” location in front of Dragonfly Gallery at the main intersection. Now you don’t have to hunt for them as they stake a daily claim for valuable street-side real estate among the vendors of fish fillets, farm fruits and vegetables, fresh squeezed orange juice, and hot empanadas as well as occasional rattan furniture and concrete planters that make our pueblo oh, so Tico. Most of the vendors set up early each morning in front of the Palí supermarket. Just a few steps away, Pura Paleta now has a home from noon to 5 each day. Read More