Costa Rica delays digital services withholding VAT to Oct 2020

Costa Rica has postponed the implementation of withholding Value Added Tax on digital services until 1 October 2020 due to the COVID-19 pandemic. The plan had been to impose 13% on transfers to unregistered non-resident providers from 1 August 2020.

Check Avalara’s global VAT on digital services tracker.

Foreign providers may VAT register directly or through local intermediaries. This will still commence on 1 August 2020. But the country is also imposing a credit card withholding VAT regime, popular in many South American countries. If a provider does not wish to VAT register, then the major payment facilitators will be alerted and then obliged to identify and split VAT payments through their systems for the elected provider. This is now delayed until 1 October 2020.

This system has been adopted for Mexican VAT on digital services.