Ride-sharing apps like Uber and DiDi, plus online travel booking sites will start charging VAT from December 18, 2020.
Other digital services to start charging VAT are travel apps Booking, Expedia, and Despegar. So if you’re using these apps in Costa Rica to buy flights and hotels, whether local or international, you’ll now have 13% VAT added.
ACOPLATEC – the Association of Technological Platforms – is a body created to support the rights of ride-sharing platform drivers in Costa Rica. According to a report in La Republica, they believe the VAT charges starting tomorrow will encourage more Uber and DiDi users to pay with cash instead of with their cards.
This will negate the 13% VAT charge, as it’s the card issuing bank that collects this money to pay the government, not the platform itself.
— La República (@La_Republica) December 17, 2020
The same thing happened with other digital services who started charging VAT in October, like Netflix.
You don’t see the extra 13% on your Netflix bill, but rather from your bank.
To that end, Uber has already confirmed they won’t be raising their fares to cover this extra 13%. For their part, DiDi say they’re going to wait and see.
Charging 13% VAT for digital services in Costa Rica was originally meant to start in August.
The government pushed it back to October to give the platforms, banks, and credit card companies time to figure out their billing strategies. The platforms that began taxing their services in October were mostly streaming sites like Netflix and Spotify.
Ride-sharing and travel booking services were exempt until now.
Even so, without these platforms, the government still raised almost $1.7 million in October. Costa Rica’s treasury says they’ll be keeping the list of taxable digital services under constant review.
No digital content platform may charge more than 13% for Value Added Tax (VAT) to its clients in Costa Rica…
— The Costa Rica News (@TheCRNews) September 16, 2020
Platforms to begin charging VAT from December 18, 2020:
Platforms charging VAT since October 1, 2020:
James Dyde is the editor of centralamerica.com. He lives in Escazu, Costa Rica.