PropertyReal EstateTaxes

Proposed Suspension Of Municipal Taxes

Several bills are being discussed by the Costa Rican senators right now which are looking to suspend or reduce the municipal property tax collections, as part of the measures to help those affected by the sanitary emergency of the new coronavirus.

Some of these bills propose to allow taxpayers to access a moratorium, or a decrease from 25% and up to 50% in taxes, fees, services, and other municipal charges.

The legislator María José Corrales, for instance, proposes that such reduction of 50% in the taxes collected by the municipalities, should apply to those quarters of 2020 that will be defined by municipal agreement, only to benefit those taxpayers who are up to date with their municipal property taxes, and that should be granted to periods that have not been endorsed by the union of local governments.

Moreover, as also proposed by that same bill, a total or partial remission of the surcharges, interest, fines, and other charges for penalties owed in municipal charges should be granted. Such a measure would apply in the period from the first quarter of 2020 to the closing of the second quarter of the current year. And in order to be eligible for special reduction or tax condonation benefits, the taxpayer must be subscribed to a commercial license and should be up to date with the payments corresponding to the last quarter of 2019.

On the other hand, this past Tuesday March 31st, a bill was introduced by the senators which proposes that the municipalities grant a moratorium, which would allow to transfer the dates of tax payments until April 2021. This would, help as these senators mentioned, “to guarantee that workers, entrepreneurs, and merchants, in their communities, have options that would allow them to face their commitments to the municipality”. 

In addition, the National Union of Local Governments (UNGL), which is the organization that represents municipalities as a group, announced that they will also present their own proposal on the matter. As informed by them, “they have tried to agree with the entire municipal system on a bill that tries to specifically benefit the taxpayer, through direct benefits that they could receive in terms of permits, licenses, and the different contributions that they carry out with each one of the local governments”.

According to the UNGL, for them the most important thing is not to affect some of the essential services such as waste collection, safety issues, water, track cleaning, and additional services.

For now, as mentioned, all of these options are being discussed, so we would need to wait and see what is the final decision on the matter.

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Gloriana Fajardo

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