No tax hikes until 2017 as government sets sights on evaders instead

August 8th, 2014 (InsideCostaRica.com) Costa Rica will delay plans to raise taxes until 2017 as the government of President Luis Guillermo Solis focuses on cracking down on tax evaders to narrow the country’s widening fiscal deficit instead.

Solis, on the campaign trail prior to his May election, vowed to not raise taxes before 2016.

Solis sent a bill to the Legislative Assembly on July 31st aimed at cracking down on tax evasion.  Two additional bills aimed at turning the sales tax (IVI) into a value-added tax and another bill to revamp the income tax scales will be delayed until 2016, ruling party lawmaker Otton Solis told Bloomberg.

“We are looking at the middle of 2016 for the presentation of everything, the value-added and the income tax. […] Optimistically we would implement them in 2017,” Solis told Bloomberg.

Costa Rica’s tax authorities shuttered 16 businesses this week for failing to comply with the General Sales Tax (IVI).

The Ministry of Finance also reminded those who own vacation rentals that they must pay the IVI in the same manner as hotels, warning that stricter enforcement is on its way.

The government said this week that the country’s budget deficit will widen to 6.6% next year, an increase of about 0.6%.