A San José court ruled Wednesday that sales tax should not apply to a range of popular outdoor tourism activities in Costa Rica. The ruling reverses a previous decision from the Finance Ministry to begin collecting 15 percent sales tax on activities such as bungee jumping, canopy tours, hiking, spas and birdwatching. Until last year, these activities were exempt.
The court’s decision came after the National Tourism Chamber (CANATUR) filed a complaint against the Finance Ministry’s 2014 decree expanding the scope of the sales tax.
Chamber President Pablo Heriberto Abarca said Thursday that he was very happy with the outcome and that the final result will be nothing but positive for the tourism sector. He also asked President Luis Guillermo Solís not to file an appeal against the court’s ruling.
The Finance Ministry ordered businesses to start collecting sales tax on certain tourism activities in April 2014 following a request by the Environment Ministry to interpret how the sales tax law should be applied to recreational activities within protected areas. The analysis resulted in a new decree taxing those activities everywhere and also stating that the taxes must be collected retroactively for 32 years — dating back to the adoption of the sales tax law in 1982.
Tourism industry leaders railed against the expanded taxes, saying they would force businesses to close. They claimed at the time that the increase in prices and entrance fees would reduce the average stay of foreign tourists — currently eight to 12 days — by at least one day.
“One day less means losses of some $184 million a year in revenue for us,” Kathia Valverde, president of the Costa Rican Association of Tourism Operators, said in July 2014.
Industry leaders also said tours were likely to start excluding outdoor activities that would represent higher expenses, including visits to national parks and protected areas.