Costa Rican President considering internet gambling taxation

5 percent tax in prospect

Rumours that the many online gambling operators based in the tax haven of Costa Rica are about to be taxed were given credibility this week by the respected UK publication The Economist.

The lack of real online gambling regulation in Costa Rica, along with the hitherto benevolent taxation system for foreign companies has made the country popular with many online gambling operators and several software providers.

On May 8 the country inaugurated a new President in Laura Chinchilla Miranda (51), who stood for election on an anti-crime and anti-corruption ticket. Now that she is in power, the President is apparently looking for the tax revenues that will enable her to achieve her objectives.

The Economist claims that online gambling is at the top of her list of soft targets, reportedly with a planned 5 percent tax with the goal of raising an extra 1 percent on GDP.

The Costa Rican government presently collects a mere 14.8 percent of GDP in taxes, and its most recent annual deficit was 4 percent of GDP.

President Miranda could have a fight on her hands. Hitting up the online gambling sector for revenue has been less than successful over the years despite several attempts, and she will need the cooperation of the Liberation Movement political party, whose leader Otto Guevara is on record as opposing such a tax and threatening to delay or halt any attempt to impose same.

Costa Rica has been an appealing location from which to conduct e-commerce, especially in the Internet gaming sector. Companies, even when not incorporated in Costa Rica, are permitted to operate websites under an all-encompassing, simple data processing license.

In addition, no tax is paid on foreign-sourced income. About 380 companies operate under such licenses, turning over hundreds of millions of dollars a year, reports The Economist.

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