Latin America Advisor

Latin America Advisor

A Publication of The Dialogue

What Will Proposed Tax Reforms Mean for Costa Rica?

Costa Rican President Rodrigo Chaves’ government is seeking to pass a package of tax reforms. // File Photo: Costa Rican Government.

Costa Rican President Rodrigo Chaves’ government proposed bills in May aimed at reforming the country’s tax system. Provisions within the four bills include approving a new income tax, eliminating specific value-added tax exceptions and granting greater control, a corporate income tax and inspection powers to the tax authority. What is the current status of the tax reform, and what are some of its most important details? Who would be most affected by these changes? What are the chances of the reforms being passed?

Lucas Perelló, assistant professor of political science at Marist College: “Costa Rica has a pressing need for tax reform to strengthen the troubled state of its public finances. The government’s gross debt continuously expanded under the two center-left Citizens’ Action Party (PAC) presidencies from 2014 to 2022. As elsewhere, the government’s response to the Covid-19 pandemic led to a significant surge in debt, which reached 68 percent of GDP in 2021, according to the International Monetary Fund. In 2022, Rodrigo Chaves, who had a brief seven-month stint as minister of finance during the government of Carlos Alvarado, ran for president, promising tax reform. Hence, there was no question whether Chaves would present a tax reform. It was mostly about when that would happen. After months of speculation, his government unveiled the reform in May, rather late considering…”

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The Inter-American Dialogue publishes the Latin America Advisor every business day for a distinguished membership of informed corporate leaders, scholars, and government officials invested in Latin America’s development and future. The Advisor‘s highly regarded Q&A section covers questions submitted by subscribers themselves. Commentators regularly include heads of state, business leaders, diplomats, economists, analysts, and thought leaders from around the world. Many of the world’s largest and fastest-growing companies subscribe to the Advisor. To subscribe click here or for more information, contact Gene Kuleta, editor of the Advisor, at

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