This Thursday, the Costa Rica Government presented their new tax reform proposal to Congress, the project (The Strengthening of Public Finances Law), expects to reduce the existing gap between incoming and outgoing funds, balance the country’s budget by going from a 5% to a 2% of the Gross Domestic Product (GDP).

This is the third proposal presented by the Government to Congress to try to get a plan approved that will increase the amount of taxes being collected. The Government is facing a liquidity problem which is not new, this situation had been announced since 2009 and none of the tax plans presented by Solis or the government before him (Chinchilla administration) have received the green light from Congress for different reasons.

One of the proposals included in the project exposes the possibility of creating a 15% tax over the aggregated value of the <a href=”http://news.co.cr/streaming-services-available-costa-rica/63413/”>television streaming services such as Netflix, Amazon Video, iTunes Store and HBO GO to mention a few</a>. It hasn’t been clarified whether this includes other services such as Apple Music or Spotify.

<em>“We are introducing innovative norms that are not in the original proposal of the transformation of the sales tax (currently 13%) to an aggregated value tax to charge services that are acquired through the internet (Digital economy) and which create competition for the domestic services as is the case of the streaming services. This is a discussion we had at international level with the <a href=”http://news.co.cr/oecd-costa-rica-tax-reform-needed-ensure-inclusive-growth/64111/”>OECD regarding that they call the digital economy and how to tax it</a></em>”, explained Fernando Rodríguez, Vice minister of Treasury.

The 15% tax being proposed would also be charged for all goods and services, this means doctors, lawyers, fitness centers, etc. with the exception of private education.

Many other reforms are included in the proposal such as changes to public employment and a limit to the salary of high ranked public servants as well as changes to the way the salary incentives are currently calculated.

Treasury also maintained the idea included in previous proposals of creating two additional income tax rates for high salaries, currently, the highest payable tax is 15%, this Law would add 20% and 25% calculated according to the income generated.

Global rent is also an important figure for legal corporations, through which, companies would be obligated to declare over the totality of their income, and deduct the total amounts associated with the same.