QCOSTARICA — Forty-one legislators rejected this Monday the fast-track motion for a bill seeking to prohibit the application of the 13% Value Added Tax (VAT) to the Sinpe Móvil (Mobile Sinpe) by the Ministry of Finance.
This comes after the Ministry of Finance announced its plans to tax commercial transactions next year.
This is File 24,750, “Law to Protect Sinpe Móvil Users from Fiscal Greed, Reform of Article 29 of the Value Added Tax Law, No. 6826 of November 8, 1982, and its amendments,” by Progressive Liberal Party (PLP) representative Eli Feinzaig.
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The fast-track motion to bill 24-750 (Ley para Proteger al Usuario de Sinpe Móvil ante la Voracidad Fiscal, Reforma del Artículo 29 de la Ley del Impuesto al Valor Agregado, N.°6826 del 8 de noviembre de 1982 y sus reformas) seeks to bypass committee proceedings and move directly to discussion in the Legislative Plenary.
“The PUSC faction is in favor of no more taxes, and we want to make that clear. (…) This issue must be approached carefully to protect this segment of the population that uses (Sinpe) itfor personal payments. We’re talking about new taxes here,” declared the leader of the Partido Unidad Social Cristiana (PUSC) faction.
Carballo stated that the rejection of the waiver of processing is due to a “concern” that bills that don’t have a general agreement “will go to the Plenary.”
Along the same lines, ruling party representative Pilar Cisneros expressed her gratitude for the ruling against the waiver of processing.
“Businesses tell customers, ‘Pay me through Sinpe,’” Cisneros asserted.
In defense of the bill, PLP legislator Gilberto Campos asserted that this issue must be resolved as soon as possible.
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“It’s clear that we want to help people now, it’s clear that we want to ease people’s pockets now. Because if this bill goes to committee, I can assure you that it will be up to the next Legislative Assembly or the next government. Let’s hope it’s not a ‘jaguar’ that arrives and has to resolve this issue,” the legislator stated.
“The bill is designed for the poorest people in this country,” Campos emphasized.
Only five legislators voted in favor of the fast-track.
What does the bill seek?
The initiative proposed by the PLP establishes a ban on withholding of the Value Added Tax (VAT) on transfers made by users of the National Financial System through any electronic banking channel, known as SINPE.
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This includes accounts linked to mobile phone numbers, known as the Sinpe Mobile of the Central Bank of Costa Rica, or other applications that meet the same requirements.
Finance Minister Nogui Acosta confirmed that the tax department is in the final stages of a plan to modify the Central Bank’s platform.
This would allow payments made through SINPE to businesses to include automatic VAT withholding. This tax is already in effect for credit and debit card payments.
How does this affect the user?
In practical terms, the tax withholding should not affect the consumer using the Sistema Nacional de Pagos Electrónicos (SINPE) or SINPE MOVIL (SINPE mobile) payments to make transfers between friends, family members and colleagues.
It would affect the consumer using SINPE to make a purchase online or retail shop for, say a dozen donuts or a new refrigerator, for example.
SINPE transfers under ¢100,000 colones are completely free of charge. Amounts over that are based on real-time transfer (US$3) or delayed typically after 6 pm (US$0.75) when transferring money from one bank to another using the SINPE platform, either through a bank’s website or mobile device.
In common use in Costa Rica, SINPE movil, linked to a telephone number and a bank account, is used for all types of transactions, sending money to a friend, or paying for a loaf of bread at your local bakery.
Whether standing at the counter of your pizza shop or making the purchase remotely, transactions are free (if under ¢100,000 colones), that is, there is no charge to the sender or receiver.
The tax department feels it is losing out taxes on these transactions, however, it has not made it clear how it can distinguish between a commercial transaction (as above) or simply the sending of money to a friend.
The concern is that the tax department may make a cash grab and then leave it up to users to work out the tax issue.
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