Costa Rica’s Finance Ministry on Wednesday published a decree authorizing a tax reduction on imported used cars, meaning lower sale prices could be available soon.
Currently, the tax rate on new cars or models up to three years old is 30 percent. Models up to five years are taxed 40 percent, and those older than six years have a rate of 53 percent.
The new rate system stipulates that cars up to six years old will pay 30 percent tax, while cars of seven or more years will pay gradual rates ranging from 40-48 percent.
Finance Ministry officials expect that keeping higher taxes for older vehicles will help renew the models of cars circulating in the country and therefore reduce air pollution.
According to Riteve SyC, the Spanish-Costa Rican company in charge of technical mandatory vehicle inspections, an estimated of one million cars circulate in the country and more than a third of them – some 359,000 – are 13-20 years old.
José Carballo, director of the Chamber of Used Cars Importers said the government “finally managed to do justice […] and the decrease will soon reflect lower prices for clients.”
A price drop for used cars is set to apply starting Aug. 17 as established by the publication of the official newspaper La Gaceta.
Last July, the government also approved a reduction in the Selective Consumer Tax for new hybrid/electric vehicles, which currently are taxed 10 percent – a third of what vehicles that use fossil fuels pay.