Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

July 16, 2019

Costa Rica’s Attorney General’s Office confirms that tax exemptions applicable to the sales tax apply to new value-added tax

On 5 July 2019, Costa Rica’s Attorney General’s Office determined (Legal Opinion No. C-185-2019) that the exemptions applicable to the sales tax apply to the value-added tax (VAT).


On 4 December 2018, Costa Rica enacted the Law on the Strengthening of Public Finances (tax reform). The tax reform replaced the current sales tax with a VAT, effective 1 July 2019. The tax reform, however, did not include a provision to repeal the tax exemptions applicable to the sales tax.

As a result, many taxpayers have raised questions regarding whether the sales tax exemptions established in other laws that are currently in force apply to the new VAT. In several private rulings, the tax authorities ruled that the tax exemptions granted in other laws were repealed; therefore, only the VAT exemptions established in Section 8 of the VAT Law applied.

Attorney General’s Office Legal Opinion

To confirm their interpretation, the tax authorities requested a legal opinion from the Attorney General’s Office (Procuraduría General de la República). The Attorney General’s Office determined that the tax exemptions applicable to the sales tax were not repealed because the tax reform did not include a provision repealing those exemptions. Accordingly, the Attorney General’s Office concluded that the tax exemptions that applied to the sales tax also applied to the new VAT. The tax authorities should follow the Attorney General’s Legal Opinion or file a bill before the Congress to amend the VAT law and repeal the exemptions that are not included in Section 8 of the VAT law.

For additional information with respect to this Alert, please contact the following:

Ernst & Young, S.A., San José, Costa Rica
  • Rafael Sayagués|
  • Juan Carlos Chavarria|
  • Antonio Ruiz|
  • Guillermo Leandro|
  • Paola Castro|
  • Randall Oquendo|
Ernst & Young LLP (United States), Latin American Business Center, New York
  • Ana Mingramm|
  • Enrique Perez Grovas|
  • Pablo Wejcman|
Ernst & Young LLP (United Kingdom), Latin American Business Center, London
  • Jose Padilla|
Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific
  • Raul Moreno, Tokyo|
  • Luis Coronado, Singapore|



The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.


Copyright © 2024, Ernst & Young LLP.


All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.


Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.


"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.


Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or Please refer to the privacy notice/policy on these sites for more information.

Yes, I accept         Find out more