VAT Penalty Moratorium in Costa Rica (2019): What Taxpayers Need to Know

Overview of the VAT Penalty Moratorium in Costa Rica

In 2019, the Costa Rican Congress approved a moratorium applicable to penalties arising from non-compliance with the newly implemented Value Added Tax (VAT), introduced as part of the recent tax reform package.

This VAT penalty moratorium Costa Rica applies exclusively to the penalties that would otherwise be imposed for non-compliance and to the related administrative proceedings initiated by the tax authority. It does not eliminate or suspend the underlying tax obligations themselves.

Taxpayers—both individuals and businesses—who are subject to monthly VAT filings remain fully obligated to submit their tax returns and pay the corresponding amounts due within the legally established deadlines.

Scope and Limitations of the VAT Penalty Moratorium Costa Rica

It is important to clearly understand the limited reach of this measure. The moratorium does not represent a general amnesty or a suspension of the VAT system. Instead, it temporarily restricts enforcement actions.

What the Moratorium Covers

• Suspension of penalties related to VAT non-compliance

• Temporary halt of administrative proceedings initiated by the tax authority

What the Moratorium Does Not Cover

• VAT filing obligations

• Payment of VAT amounts due

• Future enforcement once the moratorium expires

The Ministerio de Hacienda retains the authority to monitor compliance during this period and to fully enforce the law once the moratorium concludes.

Purpose of the Three-Month Adjustment Period

The government’s stated intention in approving the VAT penalty moratorium Costa Rica was to allow taxpayers a three-month adjustment period to adapt to the new VAT obligations.

The introduction of VAT—along with other measures included in the broader tax reform—created significant practical challenges for businesses and individuals alike. Errors, delays, and misunderstandings were expected during the early stages of implementation. The moratorium was designed to provide limited leniency during this transition, recognizing that initial non-compliance would be, in many cases, unintentional.

This adjustment period is strictly time-bound and should be understood as a temporary measure rather than a relaxation of tax policy.

When the Moratorium Begins and Ends

The three-month moratorium period begins on the date of its official publication in La Gaceta, Costa Rica’s official government gazette.

Once this three-month period expires:

• The tax authority may initiate administrative proceedings

• Applicable penalties for non-compliance may be imposed

• Full enforcement of VAT obligations resumes

Taxpayers who fail to comply after this period will be subject to the standard legal consequences established under Costa Rican tax law.

Key Points Taxpayers Should Remember

To avoid confusion, the following principles remain in effect throughout the moratorium period:

• VAT returns must still be filed as required

• VAT payments must still be made on time

• The moratorium applies only to penalties and proceedings

• The moratorium is strictly limited to a three-month duration

Understanding these distinctions is essential to remaining compliant while benefiting, where applicable, from the temporary relief provided by the moratorium.

Legal Reference

The full text of the law approving the moratorium is available for consultation and should be reviewed for exact legal wording and scope.