Costa Rica: VAT on cross-border digital services; credit, debit card issuers
Costa Rica: VAT on cross-border digital services
The tax administration announced the effective date for application of value added tax (VAT) to cross-border digital services transactions involving credit and debit card issuers has been delayed to 1 October 2020.
Initially, the effective date was set for 1 August 2020. The tax administration established two mechanisms to collect the VAT about transactions for certain digital platforms:
- Digital service provider’s or intermediary’s registration—Registration by companies selling or trading digital services or intangibles by electronic means, with the tax administration as taxpayers.
- Participation by credit card and debit card issuers—VAT to be applied with regard to transactions of their cardholders in the digital platforms listed (and only those platforms).
With the delayed effective date for credit and debit card issuers, these entities need to determine that they have in place the technology to correctly apply VAT on targeted cross-border transactions.
However, digital services intermediaries and providers that voluntarily registered with the tax administration must apply the VAT mechanism as of 1 August 2020 (as originally established).
Read an August 2020 report (Spanish and English) [PDF 63 KB] prepared by the KPMG member firm in Costa Rica
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