Costa Rica: Government Actions to Mitigate COVID-19 Impact

Government actions to mitigate the COVID-19 impact

The Government of Costa Rica has announced public policy measures to mitigate the effects of COVID-19 in the following areas: labor, taxes, education and economy.

Please find below a list of the measures taken so far:

  1. 1. Employment protection: The Government has requested the implementation of temporary measures to mitigate the economic effect over the employment. The request proposes deferred payment for social security contributions and its imbursement according to work effectively done. Today was held an extraordinary meeting of the CCSS to establish the implementation of the measures and discuss other initiatives.
  1. 2. Regarding credit: The Central Bank and CONASSIF are discussing actions to improve the credit conditions for Costa Rican homes and companies:
  • The Central Bank assess the possibility of a monetary stimulus to keep interest rates low.
  • CONASSIF will consider temporary adjustments to regulations to allow more flexibility for the modifications of credits.
  • CONASSIF will also consider the temporary reduction of countercyclical provisions, to allow further extensions of the credit for a specific period.
  • The Costa Rican President will instruct the commercial banks to analyze a moratorium in the payment of interest rates for three months extendable, in particular to most affected sectors.
  1. 3. Tributary obligations:

The Executive Power presented a bill of law under the name “BILL TO THE FISCAL RELIEF DUE THE COVID-19” which pursue the authorization of a tributary moratorium, for the payment of the income tax, IVA and custom fees of companies and PYMES, for a period of three months starting upon the effective date of the law. The deadline to pay the corresponding amount will end on December 31st without any penalty.

  1. 4. Payment of insurance and special coverage for tourists: The Executive President and the Board of Directors of INS will propose to the Superintendency of Insurance the following:
  • Preferential rate for occupational risk insurance for companies with less than 30 workers.
  • A new definition so that the accident rate for work risks that may derive from the COVID-19 is not attributed to individually considered companies but to the entire line.
  • A new product to contribute the tourism sector to cope with the contingencies caused by COVID-19.

In addition to the Bill of Law presented by the Executive Power there are other initiatives created by some deputies interested in the reduction of the affectations, to mention some not yet presented:

  • LAW TO SAFEGUARD THE NATIONAL PRODUCTIVE SECTOR AFTER THE COVID-19 EMBATE.
  • GENERAL LAW OF SALVATION OF COMPANIES DUE THE DECLARATION OF PANDEMICS.

These measures that are not immediately applicable, are subject to the approval of the Congress or the publication of the corresponding decrees.

Our Government Affairs Department will be monitoring this matter. If you require any additional information, please contact Carlos F. Camacho carlos.camacho@ariaslaw.com

Government actions to mitigate the COVID-19 impact – Update 2

The Government of Costa Rica has announced new public policy measures to mitigate the effects of COVID-19 in the following areas: border control, financial system and the judiciary procedures.

1. Monetary Policy: The Central Bank, the National Council on Economic Supervision (CONASSIF) and the Banking Supervision Authority (SUGEF) enacted certain measures to alleviate the impact of COVID 19 on banks, borrowers and the general economy. The main measures agreed to are:

  • The Central Bank Monetary Policy Rate was reduced to 1,25%
  • Banks will now be able to renegotiate terms on loans up to two times in a period of 24 months without such renegotiation affecting the borrower’s credit score.
  • SUGEF reduced the counter cyclical reserve rate for banks to 0% which means banks can free up more funds for lending.

2. The Ministry of Health and the Immigration Authority agreed on the following changes:

  • - No new applications for legal permanence will be received, under any migratory category, between March 17 and May 17, 2020; For those who have already processed birth and criminal records, their validity will be considered extended until July 17, 2020.
  • - Appointments to document cases and renew DIMEX: They will only be attended before the Costa Rican Post Office and the Bank of Costa Rica, no appointments will be granted at the General Directorate of Immigration and Immigration.
  • - Renewals of temporary residences and special permits: Applicants may benefit from an extension of the term until July 17, 2020.
  • - The entry of people to the offices of Immigration will be restricted.
  • - Tourist visas granted after December 17, will be considered extended until May 17, 2020
  • 3 The Supreme Court of Justice decided to suspend all judicial hearings from March 17 to April 3. Hearings will only be held in the following cases:
  • Cases followed before Courts of Domestic Violence and Alimony Courts.
  • Cautionary measures in criminal proceedings.
  • Cases where the statute of limitations can be surpassed.
  • Cases in which the trial process has already started must be completed as set.

Our team will continue to monitor the situation closely and we will keep you informed on the new measures.

GOVERNMENT ACTIONS TO MITIGATE THE COVID-19 IMPACT - UPDATE 3

The Government of Costa Rica announced new labor and social security measures to mitigate the effects of COVID-19 on the workplace. Please find below the detail of the actions taken so far:

  1. 1. Health recommendations for employees in non-teleworking positions: The Ministry of Labor issued a guideline to protect employees whose jobs are not applicable to work remotely: The employer must adapt the workfunctions to reduce direct contact with other citizens. Also, the worker must be placed at least 1.8 meters away from users or fellow employees.
  1. 2. Exceptional and temporary regulations for medical leaves: The Board of Directors of the Costa Rican Social Security Fund approved the addition of article 10 bis to the Health Regulation and of the article 2 of the Regulations for the Granting of Licenses and Medical Leaves to Beneficiaries of Health Insurance, as exceptional and temporary regulations due to the Coronavirus. These regulations extend the concept of medical leaves to include cases in which patients are under investigation or likely to suffer from the COVID-19 virus.
  1. 3. Changes of the procedure for the partial suspension of employment agreements: Guidelines were established to adapt the legal procedures and make the procedure for partial suspension of employment agreements more expeditious.
  1. 4. Bill of Law to reduce working hours on a temporary basis: This bill seeks to allow the reduction of working hours by up to 50% on a temporary basis, to deal with the declaration of an emergency.
  1. 5. Suspension of Conciliation Hearings before the Ministry of Labor's Alternative Resolution Center: The Ministry of Labor agreed to suspend all conciliation hearings starting from March 17th, 2020 and for the entire month of March.
  1. 6. Non-recording of accidents at work for Risk Policy: The Board of Directors of the National Insurance Institute submitted for SUGESE's approval a petition to establish that, in the event of occupational risks caused by COVID-19, the amount of the Occupational Risk Policy will not be affected by the occurrence of such risks.

Our team is constantly monitoring this particular worldwide situation, and we will be informing all the actions and legal implications.

If you require further information please send your query to carolina.soto@ariaslaw.com

GOVERNMENT ACTIONS REALTED TO TAXES TO MITIGATE THE COVID-19 IMPACT - UPDATE 4

On March 17, 2020, the Congress of Costa Rica approved in a first debate an amendment to the Bill of Law “Tax Relief against Covid-19”. The following provisions are being approved in the bill:

  • VAT moratorium: Taxpayers must file the VAT returns corresponding to March, April and May, but may choose to postpone the tax payment for these months by December 31, 2020 or make a payment arrangement with the Tax administration.
  • Elimination of quarterly advanced tax payments: Quarterly advanced tax payments of the corresponding income tax to be made in April, May and June 2020 will be eliminated once.
  • Moratorium on Excise Tax: Taxpayers must file the corresponding declarations for March, April and May, but may choose to postpone the payment of the tax for these months by December 31, 2020 or make an arrangement payment with the Tax Administration.
  • Tariff moratorium: Importers may nationalize merchandise without paying the corresponding tariffs during the months of April, May and June 2020. Agricultural and livestock products classified from Chapter 1 to 24 of the Central American Tariff System are excluded from this measure. The tariffs for those months must be entered before December 31, 2020 or make a payment arrangement with the Tax Administration.
  • VAT exemption on commercial leases: Commercial leases are exempt from VAT for the months of April, May, and June 2020; as long as the lessee and lessor are registered before the Tax Administration under the general regime or the special agricultural regime.

The approval in second debate for this Bill is expected tomorrow.

Our team is constantly monitoring this situation, and we will be informing all the actions and legal implications. If you require further information, please contact our partner Carolina Flores Carolina.flores@ariaslaw.com.

On March 17, 2020, the Congress of Costa Rica approved in a first debate an amendment to the Bill of Law“ Tax Relief against Covid-19”. The following provisions are being approved in the bill:

  • VAT moratorium: Taxpayers must file the VAT returns corresponding to March, April and May, but may choose to postpone the tax payment for these months by December 31, 2020 or make a payment arrangement with the Tax administration.
  • Elimination of quarterly advanced tax payments: Quarterly advanced tax payments of the corresponding income tax to be made in April, May and June 2020 will be eliminated once.
  • Moratorium on Excise Tax: Taxpayers must file the corresponding declarations for March, April and May, but may choose to postpone the payment of the tax for these months by December 31, 2020 or make an arrangement payment with the Tax Administration.
  • Tariff moratorium: Importers may nationalize merchandise without paying the corresponding tariffs during the months of April, May and June 2020. Agricultural and livestock products classified from Chapter 1 to 24 of the Central American Tariff System are excluded from this measure. The tariffs for those months must be entered before December 31, 2020 or make a payment arrangement with the Tax Administration.
  • VAT exemption on commercial leases: Commercial leases are exempt from VAT for the months of April, May, and June 2020; as long as the lessee and lessor are registered before the Tax Administration under the general regime or the special agricultural regime.

The approval in second debate for this Bill is expected tomorrow.

Our team is constantly monitoring this situation, and we will be informing all the actions and legal implications. If you require further information, please contact our partner Carolina Flores Carolina.flores@ariaslaw.com.