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Californicationdude
PostPosted: Wed Feb 22, 2006 1:26 pm 
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Our readers' opinions

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Costa Rica has made
a big mistake with tax

Dear A.M. Costa Rica:

Well, Costa Rica is about to drive a death nail into the influx of foreign investment money coming into the country.

Because your leaders have squandered revenues and pocketed much of it for their own personal coffers, they now are turning to the familiar tax-and-spend tactics of some of the bigger countries. Now we read today in A.M. Costa Rica that the new tax law has slipped in a capital gains tax. That should be the final nail in the coffin for Costa Rica investment money.

It is unfortunate because much of this money invested in Costa Rican real estate goes directly to the people in new jobs, and support for local economies from an influx of new residence and tourist. Many are leaving the U.S., Canada and some European countries to escape the oppressive taxes in their home countries.

Your leaders are a bunch of arrogant, uninformed fools and just gave the biggest boost to Panama tourism and real estate they could have given.

Is it any wonder that Panama just this year replaced Costa Rica as the most desired retirement destination for expats. We have friends that were planning on buying some real-estate and eventually moving down here. We are advising them to look elsewhere if this new tax law passes.

I guarantee you my investment money is going elsewhere. Anyone want to guess how much of any new revenue generated from the purposed new taxes
still ends up in the pockets of your elected officials? The only difference is their pockets will be a little fatter this time. My guess is most of it will end up in their pockets, and two or three years from now you will still see the same horrible road conditions, and your leaders will be moaning about the need for higher fuel taxes and increase in registration and RTV fees with the grandiose idea that the new money once again will go to repair roads. Great move, Costa Rica.


David K Treadway
Esterillos Oeste



Why was there not more
discussion of tax bill?

Dear A.M. Costa Rica:

“Value-added plan full of new taxes and exemptions” is pretty depressing news, and I don’t even live in Costa Rica. I visit frequently, and I know folks there, however. It’s sad to think of CR sinking down into so much high taxation. Your article makes the proposed tax laws sound even worse than those in the U.S.

I do have one question: why haven’t the citizens of CR discussed this issue more? Are they unaware of the expensive consequences of these changes, or has the national Spanish language media underreported it? Your article makes it sound like a crushing blow delivered with little warning.


Joe Vines


EDITOR'S NOTE: A.M. Costa Rica has published many stories on the tax bill. Only recently did the proposed tax law survive 1,000s of motions and amendments. Until the form was fixed, it was hard to tell what the law would do.





I know some of our Veteran Members have been mentioning the virtues/advantages of Panama (as well as the possibilities of investing/living in such places as Nicaragua, Mexico, etc...)

But, do any of the Resident, well versed and/or frequent visit members think there will be a severe reprecussion from the implimentation of the above mentioned Tax Law proposals?

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Thirdworld
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PostPosted: Wed Feb 22, 2006 2:07 pm 
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Nope, because 10% is still much less than capital gains taxes in the States. And also, there will be a way around it as they aren't smart enough to monitor this. Just have a good accountant and lawyer and it will be business as usual.
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Irish Drifter
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PostPosted: Wed Feb 22, 2006 2:22 pm 
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Thirdworld wrote:
Nope, because 10% is still much less than capital gains taxes in the States. And also, there will be a way around it as they aren't smart enough to monitor this. Just have a good accountant and lawyer and it will be business as usual.


While you may be correct in your assumption of their ability to monitor this, as past taxation collection has shown, there is a significant and potentially ominous change as it applies to this bill.

The procedures and the enforcement of those procedures have been, in a large part, written by the United States IRS. The IRS is also training the Costa Rican authorities in collection and in selection and installation of the computer software to track collections.

The IRS has shown itself to be very adapt at what they do in the US and their involvement in CR is not good news.

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Thirdworld
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PostPosted: Wed Feb 22, 2006 2:28 pm 
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You might be right about that. All depends on how much the IRS gets involved. Not sure they CAN train the agencies that be to do it and be efficient unless they are offering money and equipment. Most official offices still work on a typewriter. But it is time to start getting advice. I've got one and am creating several more corporations here and am looking into having a corp. in Panama which owns and controls one of the corporations here.

Not being naive, I've just never seen a trace of efficiency in six years. But always better safe than sorry.
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Californicationdude
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PostPosted: Wed Feb 22, 2006 5:55 pm 
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Not being naive, I've just never seen a trace of efficiency in six years.



hahahahahahaha.....c'mon now, we all know you've seen worse

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VegasBob
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PostPosted: Thu Feb 23, 2006 10:12 am 
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Costa Rica seems less adept at enforcing new laws than they are in passing them. "After 1000s of motions" the law was passed. Actually a 10% capital gains tax,properly done (which probably is impossible here) would be a small price to pay if it really did go towards fixing the roads. But then again what do I care.I rent a house and don't invest here. lol
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LVSteve
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PostPosted: Thu Feb 23, 2006 10:32 am 
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VB;
You should care - the new tax law also includes a 6% tax on rent payments that your landlord will most likley pass on to you.
LVSteve

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Tman
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PostPosted: Thu Feb 23, 2006 11:23 am 
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Now you know another reason I moved to Panama 8) . While it may take time for their collection and efficiency to improve to put teeth into this, you are already seeing serious capital flight to Panama...from wealthy TICOS! I truly believe you will hear a big WHOOSHING sound of gringos moving out of Costa Rica...they already are.

The biggest tax that will come from these changes that will create nightmares there in CR is the real estate capital gains. As one article points out...almost EVERYONE in a real estate deal there underreports the purchase price substantially. A $100k sale is listed as $1400 for example (in colones). This new bill will tax a property sale without index for inflation or taking into account the currency devaluation of the colone. So the tax on $86,000 difference will be substantial. Now put yourself in the shoes of foreign developers with multimillion dollar properties...this is a real hit and will drive investment elsewhere. Which means current property values could go south fast. Not trying to be a doomsdayer or anything, but this is the pendulum swinging far from the middle by the CR government. This makes the pensionado deal in Panama look that much better. Plus there is still no capital gains in Panama for foreigners on passive income or real estate gains.

The upside of this could be driving more Ticas into the streets and Delrey when their jobs (sportsbooks etc) and Gringo sugar daddies go elsewhere. More supply and less demand should drive prices down :twisted:. The days of CIEN are numbered...
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Irish Drifter
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PostPosted: Thu Feb 23, 2006 1:11 pm 
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Tman wrote:

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The upside of this could be driving more Ticas into the streets and Delrey when their jobs (sportsbooks etc) and Gringo sugar daddies go elsewhere. More supply and less demand should drive prices down . The days of CIEN are numbered...


Certainly hope that you are correct in that regard. Don't look for the sports books to disappear they made sure they got a sweetheart deal in the final draft. Same world over big buck business + greedy politicians = sweetheart deals that screw the little guy. :evil:

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Californicationdude
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PostPosted: Thu Feb 23, 2006 2:52 pm 
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Now you know another reason I moved to Panama


ok, I tried to do a search on your prior posts, (good golly molly, 70+ pages) and read the panama reports/topics....

guess I will have to at least check out and visit Panama on one of my longer visits/stays


All I remember of Panama is from years ago when visiting on cargo/tanker ships....

I can still recall cleary one little Panamanian darling that to this day brings tears to my eyes....she was a totally, totally smoking hot woman....

I believe it when people tell how nice looking some of the women are


guess it would be smart to compare living conditions/options and costs with Costa Rica.....

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Tman
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PostPosted: Thu Feb 23, 2006 3:41 pm 
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Its probably not for everyone...but for Papichullo and I who live here...Panama is a nice place to call home. Lots safer...less street hustling and crime...much better restaurants and clubs to go to. P4P isnt as organized or evident as CR...but theres plenty if you know where to look. Carnivale starts tomorrow. Should be some crazy times.

Come on down...
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DannyZee
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PostPosted: Fri Feb 24, 2006 3:17 am 
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Tman wrote:
As one article points out...almost EVERYONE in a real estate deal there underreports the purchase price substantially. A $100k sale is listed as $1400 for example (in colones).

This new bill will tax a property sale without index for inflation or taking into account the currency devaluation of the colone. ...


Yup. I have been going to CR since 1999, and all the ticos I know never reported actual property value buying/selling land. They didn't do it, their parents never had to do it. Heck, almost all of them never paid income taxes.

For CRT members who have lived or still residing in SJO, do you see any plus side for the ticos to this soon to be new tax bill ? I mean, seriously, I don't see any , other than the ones that will be pocketing the tax money.

If the new government will strictly enforce tax collection, boy oh boy... as Tman mentioned, for phucking sure we'll see a lot more tica putas in SJO.

Most of the ticos ticas I know in SJO are tight with $, even for those that have good office jobs. Just how the hell can they handle paying more taxes ?
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Thirdworld
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PostPosted: Fri Feb 24, 2006 1:45 pm 
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Tman, how hard is for an American to walk into a bank in Panama and open an account?
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Irish Drifter
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PostPosted: Fri Feb 24, 2006 2:41 pm 
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One of the major problems in Costa Rica is the lack of and the ineffectual method of collecting those taxes already on the books. It is no secret that properties are severely undervalued for tax purposes, that merchants will give you a better price if you are willing to accept not getting a factura (receipt) for your purchase so they do not have to remit sales tax. There are enormous loopholes that people happily use to avoid taxes.

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For CRT members who have lived or still residing in SJO, do you see any plus side for the ticos to this soon to be new tax bill ? I mean, seriously, I don't see any , other than the ones that will be pocketing the tax money.


If, and this is certainly a big if based on past performance, the government institutes a collection system that ensures the collection of all taxes from all people fairly there will be benefits to everyone residing in CR.

At present over half of the Costa Rican budget is financed through deficit financing. This leads to a high inflation rate (2nd in Latin America) which effects the working class disproportionately. The proposed tax bill (again if collected fairly) will give the government sufficient resources to fund necessary functions that will lead to better infrastructure that will benefit all. Inflation will be controlled and that will lead to more prosperity for everyone.

Admittedly all that might not happen politicians being politicians but if does that is what I see as the answer to the question
Quote:
do you see any plus side for the ticos to this soon to be new tax bill ?


I am sure there are others who have a different view on this issue.

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Thirdworld
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PostPosted: Fri Feb 24, 2006 2:56 pm 
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I just don't give them that much credit. One, I don't think they can collect the new taxes any better than the old ones, unless the IRS is actually working with them and not just consulting. And if they do collect them, you will still hear all the excuses from gov't... No money for roads, no money for this and that. I wouldn't actually have a problem with the taxes if they sent a cop when called, offered decent services, and weren't so bogged down in corruption and inefficiency. Anyhow, it's not that hard to work around. Maybe more so if you invest in property. Which makes you really wonder how this is going to affect real estate. I know a few friends selling their property asap. And will it be killed at the 11th hour, as it is in front of the supreme court now, I believe.
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