COSTA RICA PROPOSES NEW GAMING TAX - Posted by KatA 

Costa Rica is home to more online gaming companies that any other country in the world. Many of these companies cater to North Americans but manage to avoid paying taxes on either continent. Every few years, Costa Rican officials come up with a plan to put an end to this. However, so far none have been successful. The latest proposal by the Costa Rica Finance Ministry involves a 2 percent tax to be levied on gaming industry income. If the tax is approved by the Legislative Assembly it could bring in $85 million a year. However, many are suspecting this tax will be as unsuccessful as the government’s previous attempts to tax and license the gaming industry. For example, a few years ago when Costa Rica charged a gaming licensing fee, only a few of the most reputable gaming sites paid it. Another plan involved taxing firms based on the number of their employees. This plan also failed to go through as it would have punished the larger firms. A similar problem could result from this plan. Officially there are only 46 online gaming businesses in Costa Rica. Unofficially there may be hundreds more. As this tax could only be levied on the legitimate, registered companies, it would be putting them at a disadvantage. Until Costa Rica comes up with a better system for weeding out unlicensed or unregistered gaming operations, a new gaming tax may be a bit of a lofty goal. Legislators say that if the bill passes, a regulatory body would be put in place to crack down on unlicensed operations. However, no one has proposed a solid outline of how this would work. Another drawback to this plan is the current economic climate. The Costa Rican gaming industry has been hit hard by the recession and many are feeling that it’s not the time to bring about a new tax. Jorge Hidalgo, vice president of the Costa Rican Association of Casinos, says that "Activity has fallen about 35 percent, and in addition to that we have fewer work hours and have had to let go about 500 employees.” For better or worse, the tax bill will reach Costa Rica’s Legislative Assembly on August 3rd.