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(506) 223-1327        Published Tuesday, Feb. 21, 2006, in Vol. 6, No. 37          E-mail us    
Jo Stuart
About us

Capital gains tax part of new fiscal proposal
By the A.M. Costa Rica staff

The new tax law, if passed, will create a capital gains category subject to a 10 percent tax. This is the first time Costa Rica would have such a tax.

The measure, if passed on second reading, will assess a 10 percent tax between what an individual or a corporation paid for an asset and the sale price. The value would be rolled into the income tax calculations for the year the asset was sold.

There has been no discussion of a capital gains tax, at least in Enblish, and the new category is only found by a close reading of the 385-page proposed law. The essential clause is in the fifth section, Article 30(5).  The amount of the tax is in Article 135(h).

Although a capital gains tax would be assessed on any asset, ranging from works of art to antique automobiles, the hot Costa Rican real estate market is sure to be affected, if the bill becomes law. This could happen after the measure is reviewed by the Sala IV constitutional court.

There is a special twist in the real estate industry that really could spell trouble. Many property buyers — in complicity with their lawyers and notaries — report an artificially low price to avoid transfer taxes, which are based on the amount paid. Some persons are so bold as to report a 100,000-colon ($200) price on property that may be worth $250,000.
What the value added tax
would do to expats

If the bill becomes law, officials at the Tributación Directa tax collecting agency will have a special reason to review prices that are reported. And a property owner would be liable for tax on the difference between the fake price reported several years ago and the price for which the property just sold.

The bill also seems to provide for withholding money from sales transactions when the seller is foreign. This is a way to force the individual to file an income tax report.

Similar to the old U.S. capital gains law, Costa Rica will exempt persons over 65 years from the tax once if they sell their principal residence.

There has been no discussion of this new tax, even though it is likely to cause reverberations through the national real estate market. And a capital gains tax has never been listed as one of the changes proposed under the measure in documents prepared by the Asamblea Nacional staff.

If the law is passed and signed by President Abel Pacheco, who favors it, the measure, although complex, is expected to go into force shortly after it is published in the La Gaceta official newspaper.  The proposal also includes universal taxation and a number of other fundamental changes in Costa Rican tax law.

Arias closes gap as vote count nears its end
By the A.M. Costa Rica staff

The Tribunal Supremo de Elecciones is making quicker than expected progress in counting the Feb. 5 presidential ballots. Officials reported Monday night that they have only 717 of 6,163 polling places left to check. The remainder, 88.37 percent of the nation's polling places, already have been totaled officially.

Due to hand counts of polling places in Guanacaste, Limón and Puntarenas Monday, 
as expected, a 25,000-vote lead shown earlier by Acción Ciudadana's Ottón Solís in results from the four Central Valley provinces has been cut to less than 1,000 votes.

Final results are expected to show Liberación Nacional's Óscar Arias Sánchez the winner by some 14,000 votes. That number was obtained a week ago through informal calculations by reporters. Totals as of Monday night were Arias  603,347 and Solís 604,092. Both had in excess of 40 percent of the 1,483,768 valid votes.

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San José, Costa Rica, Tuesday, Feb. 21, 2006, Vol. 6, No. 37

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Defensoria is critical
of firemen in dog attack

By the A.M. Costa Rica staff

When a rottweiler mauled and killed 25-year-old Natividad Canda Mairena Nov. 10, as he tried to break into a mechanic's shop, his consequential death led to a wave of fuming by his Nicaraguan countrymen and diplomacy by his government.  Nicaraguans were angry that firemen and police officers did little for 90 minutes as the dog held Canda in its jaws, gradually bleeding him to death. 

As a result of his death, the Defensoria de los Habitantes launched an investigation that showed a lapse in emergency procedures in dog attacks, it said.  This specifically applies to the Cuerpo de Bomberos – those who eventually turned a high-pressure fire hose on the rottweiler, causing the dog to finally let go. 

According to the Defensoria, firemen, police officers and other emergency workers stood around scratching their heads that night, and the lapse in time allowed the dog to kill Canda.  They were lacking a hierarchy that would place one emergency agency firmly in charge.  Such organization exists for any possible natural disaster therefore, one should exist for dog attacks as well, the Defensoria said. 

Because firemen freed Canda, the Defensoria said that the Cuerpo de Bomberos should be in charge of animal attacks.  Another justification listed by the Defensoria lies with the fact that firemen already have methods in place to deal with animal rescues.  Therefore, they should be able to deal with animal attacks as well, the defensoria said. 

The protocol should include procedures in which to attend to a hypothetical animal attack, but should also include necessary equipment and supplies, methods for coordination between institutions and the relative time frame workers would need to sort a situation out, the Defensoria said. 

For the most part, this responsibility falls to the Cuerpo de Bomberos, the defensoria said.  The agency points to a law which says that in emergency situations in which more than one agency is needed such as the Fuerza Pública or the Cruz Roja, the responsibility falls to the firemen to create a chain of command, the Defensoria said.   Because the firemen failed to do this, the Defensoria is asking the Junta Directiva of the Instituto Nacional de Seguros to begin disciplinary proceedings against the bomberos. 

The Defensoria is also spreading the blame to police officers.  In Lima de Cartago, where the rottweiler attack happened, Fuerza Pública officers would not enter the mechanic's property because it was private, the Defensoria said.  The defensoria recommends to the Fuerza Pública that officers protect human life over the rights of private ownership, it said. 

Benefit planned for refuge
to buy equipment for lab

By the A.M. Costa Rica staff

The Refugio de Animales in San Rafael de Heredia is holding its 13th annual rice table fundraiser Saturday.  This year, the non-profit animal refuge hopes to buy laboratory equipment with the proceeds. 

Currently, veterinarians at the refuge must take blood and urine samples from the animals, give them to owners to take to a lab, wait a couple of days for the results to process, then diagnose the animal's problem, said Leigh Monahan with the refuge, the Asociacion Humanitaria Para la Proteccion Animal.  The new equipment will allow veterinarians to make same-day or day-after diagnosis and treat the animals more quickly, Ms. Monahan said. 

Although the fundraiser costs 25,000 colons ($50) per ticket, all of the food is donated and 100 percent of the proceeds will go towards the purchase of the equipment, Ms. Monahan said. 

The rice table starts at 12:30 p.m. at the home of one of the refuge's volunteers.  Ms. Monahan said that she is expecting some 90 persons to show up.  “Rice table,” is a distorsion of the dutch word “rijstaffal,” Ms. Monahan said.  Since 99 percent of the attendees are English speakers and the two words sound alike, the event has adopted its current name over the years.  Rijstaffal is actually Indonesian food on rice, Ms. Monahan said. 

Besides treating animals, the refuge also has a program with local schools in which they invite classes of students to come to the shelter to learn about environmental and animal protection, Ms. Monahan said.  In addition, the center is the only animal shelter in Costa Rica affiliated with the Humane Society in the United States and the Royal Society for the Prevention of Cruelty to Animals in Great Britain, Ms. Monahan said. 

For more information and directions, contact the refuge at 267-7158 or (refugio@infoweb.co.cr), Leigh Monahan at 840-1040; Daphne Bellink 267-7155; Penny Santomenno 267-7054 or Laura Chandler 267-7466.

Our reader's opinion
Concealed carry laws
increase personal safety

Dear A.M. Costa Rica:

Well thank you for the morning comedy from Toronto. Usually it is from Jo. First we had Kris's Neanderthal approach to crime, then you follow with the comedy portion of the program from Toronto no less with Devry Armitage's analysis of crime and the evils of guns and the U.S.A. Of course, one would think even visiting Toronto would quickly diminish one's idealistic view of Oh Canada. Apparently not, so a few quick points.

1. There is zero, zip, no correlation between crime and poverty and education or its lack thereof.

2. Every scientific survey (worldwide, not just the USA ) of concealed weapons permits for law-abiding citizens and for countries, states and towns using gun control show a direct link to a lessening of crime, especially violent crime with the availability of legal firearms. There is also a direct correlation in increase in violent crime in countries banning firearms. Review the data from Australia and England for example. In the U.S.A., you are far safer in states with conceal carry laws.

3. Mr Wellingham's letter is largly correct, but adding to culture and lack of corruption please include a stong family structure as a solid criminal deterent. I guess that goes in his cultural causes.

4. Lastly, taking expertise on crime from a crime-ridden slum like Toronto is a hoot. Thank you for the morning entertainment. I know. I know. the mayor of Toronto is right when he blames the U.S.A. for Toronto's violent crime.
George Chapogas
Playas Del Coco.
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San José, Costa Rica, Tuesday, Feb. 21, 2006, Vol. 6, No. 37

Value-added plan full of new taxes and exemptions
By the A.M. Costa Rica staff

There's good news and bad news in the plan for a value-added tax for Costa Rica. The measure would replace the current 13 percent sales tax as part of the omnibus fiscal plan.

The idea is that each entity in the chain between raw materials and retail sales to the public would collect a 13 percent tax on the value they have added to the good.

The good news for expats is that property sales continue to be exempt from a value added tax, as is the bulk transfer of a business. Also exempt from the tax are items that would be considered part of the basic food basket, established, in part, by the Instituto Costarricense de Investigación y Enseñanza en Nutrición y Salud.

Personal hygiene products are exempt, as are goods and services used in the production of products in the basic food basket, defined by the ministerios de Agricultura y Ganadería, Hacienda y de Economía, Industria y Comercio.

But a 6 percent tax is assessed on the services of professionals, including lawyers, notaries, architects and the accountant expats are going to have to hire to figure out the details of the tax plan.

Expats also will have to pay a 6 percent tax on the cost of housing. The law exempts low-cost housing, but the exemption is set at the equivalent of $150 a month rent.

Also exempted are agricultural tires, veterinary services and products used in commercial fishing (but not sports fishing).

Prescription medicines registered with the Ministerio de Salud are exempt even when imported. Included here also are wheelchairs, hospital beds and other medical devices including prostheses and hearing aids.

Entertainment devices brought in for the Parque de Diversiones and entrance fees for the park also are exempt from the 13 percent tax, as are educational services, certain entertainment and sports services and certain cultural events recognized by the  Ministerio de Cultura, Juventud y Deportes.

Technical aid and services for persons with handicaps designed to improve their function or increase their autonomy also are exempt, as is the entry fee to the Museo de los Niños.

Premiums for insurance for persons, work, crops and housing and the reinsurance operation controlled by the Instituto Nacional de Seguros are exempt, as are shoeshine services and certain rentals of sports facilities and machinery.

Donation of services to non-profit organizations would not be assessed a tax, and services for cleaning parks, public streets and other public areas and for the collection of trash and garbage anywhere are exempt. Also exempt are treatments and removal of sewage and, it would seem, extermination services.

Banking, financial and stock brokerage services, public transportation services, the sale or delivery of musical
compositions and residential and commercial Internet service are on the exempt list.

All educational and laboratory material used in teaching or health, services contracted for by a host of public agencies and modest funeral services are exempt. Many of these transactions are exempt under the current sales tax, too.

However, the tax plan creates a special tax on luxury vehicles. Owners of vehicles worth between $35,000 and $50,000 have to plunk down an additional 15 percent of the ownership tax when they pay each December. Owners of vehicles valued between $50,000 and $70,000 will have to pay 30 percent extra. Owners of vehicles worth more than $70,000 will have to pay 50 percent more.

The money goes into the general treasury.

Totally exempted from import tax, stamps and any other fees are vehicles worth $35,000 or less that are purchased for the use of persons with severe and permanent physical, mental or sensory limitations. Vehicles for public transportation, cargo trucks and pickup trucks are exempt from extra ownership tax, regardless of their value.

Casinos will probably have to tighten up. In addition to general taxes on income, the proposed tax law says casinos have to pay a special monthly tax for each table. The amount depends on how many hours a day the table is in use for gaming. A special tax is levied on slot machines, be they mechanical or electronic. The law also says that these payments will not be a deductible expense when casinos file their income tax.

Online casinos and sportsbooks also are subject to a special tax. But first they must register with the Ministerio de Economia, Industria y Comercio. Unregistered companies will be illegal here. The ministry will assess a fee based on the number of  employees each company has. Just 10 employees carries a fee of 10 million colons ($20,000) a year. Having 61 or more employees cost 24 million colons.

Merchants will charge a uniform 6 percent on credit card purchases that will be transferred to the state fund via bank transfer no later than the day after. They will make a more precise accounting each 15th day of the month when they file a report.

Used articles represent a special case for value added tax because the tax already has been paid somewhere. In this case, those who sell used articles will have to pay a tax on the difference between the cost of acquiring the item and the sales price.

There still would exists a simplified method of tax payment for small retail outlets with 10 employees or less. Many small businesses now take advantage of this system.

Professional services will be taxed for the first time under the proposed law. Medical services would be charged at 6 percent but hospitalization would be taxed at the normal 13 percent. 

The tax on electricity and water would be 6 percent after minimal usage. Even security services would require a 6 percent tax, as would translators and consultants.

Windy weather generating waves on Pacific and Caribbean
By the A.M. Costa Rica staff

The wind gusts throughout the country that have frustrated newspaper vendors everywhere continued Monday. Although the gusts are strongest on the northern Pacific Coast, the breezes are calling large waves on the Caribbean that will stick around through Friday, said the weather institute.

The Instituto Meteorológico Nacional predicts that the wind on the Guanacaste coast will continue through Friday at least and although the forecast doesn't recognize the wind factor on the Caribbean, an attached note on the weather institutes's Web site says that the wind is causing waves that reach up to four  meters in height.  That's more than 12 feet.
For the most part, the verano temperatures are returning to normal although rain is still scattered throughout the Central Valley, the northern zone and the Caribbean.  Quepos, Limón, Golfito and Puntarenas all had highs of 30 C (86 F) Monday and Liberia reached 34 C (93 F) Monday.

The five-day forecast shows clear skies through most of the country except the Caribbean and northern zone through Wednesday, but by Thursday, clouds should return, the weather institute said.

The country has been raked by strong winds for at least five days.

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A.M. Costa Rica

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San José, Costa Rica, Tuesday, Feb. 21, 2006, Vol. 6, No. 37

Albert R. Ramdin, assistant secretary general of the Organization of American States, of Suriname helps open the inaugural session of the commission for telecommunications

A.M. Costa Rica/Saray Ramírez Vindas

Hemisphere's telecommunications experts meet here
By Saray Ramírez Vindas
of the A.M. Costa Rica staff

The Inter-American Telecommunications Commission kicked off its fourth assembly Monday night at the Teatro Nacional.

The assembly meets once every four years, and Costa Rica assumes the presidency of the board of directors. The commission is an agency of the Organization of American States, and officials have come to San José from member states in the hemisphere.

Thursday, the last day of the assembly, delegates will adopt a political declaration that will define the
region's goals and mandates in telecommunications, the organization said.

Pablo Cobb, executive president of the Instituto Costarricense de Electricidad, and his organization are the hosts for the event.  Monday he outliined the advances that Costa Rica has made in bringing access to the Internet and telecommunications to its citzens.

The commission said that delegates will share perspectives on telecommunications, and the delegates will also elect new officers to the regional commission and will consider structural reforms, programs and proposals to help member countries face new challenges.

Bush and Uribe discuss Colombia-U.S. free trade pact
Special to A.M. Costa Rica

President George Bush and Colombian President Alvaro Uribe Velez discussed negotiations toward a free-trade agreement between the United States and Colombia during a White House meeting last week.

Addressing the press with Uribe after the meeting, Bush said free trade agreements "are never easy to negotiate" and that Uribe and the Colombian trade minister are “strong in representing the interests of the people, whether they be farmers or manufacturers.”
“I'm very hopeful we reach a conclusion,” Bush said, adding that he hopes for an agreement that “strengthens markets and the appreciation for open markets.”

The president also expressed appreciation for Uribe’s efforts against narco-trafficking, and said they had discussed crop substitution and microloans for people to discourage the cultivation of illegal drugs.

Uribe said Colombia and the United States share democratic values and “the belief that democracy needs security in order to build those values.

Venezuela's Chavez is already talking about a third term in 2013
By the A.M. Costa Rica wire services

CARACAS, Venezuela — President Hugo Chavez says he may seek a constitutional referendum to end presidential term limits.

During his weekly radio and television program Sunday, Chavez said he would consider signing a decree for voters to decide if he should run for a third term in 2013.

Chavez is running for a second six-year term in December, which would be his last under Venezuela's
constitution. Pro-Chavez lawmakers, who dominate
 the legislature, are calling for an amendment to lift the two-term limit.

Opponents of Chavez say he is trying to turn Venezuela into an authoritarian state.

The leftist president is a persistent critic of the United States. He says Washington harbors imperialist designs on his country.

Chavez also accuses the Bush administration of plotting against him and says the United States  backed a coup that briefly removed him from office in 2002 — a charge the Bush administration denies.

Families await word on 65 Mexican coal miners trapped underground
By the A.M. Costa rica wire services

Rescue workers in Mexico continue the effort to reach 65 coal miners trapped by an explosion, but they are making slow progress clearing debris.

Monday, workers in Coahuila State used hand tools to dig their way toward the trapped miners. They did not use electric tools or lights for fear of igniting explosive gas in the mine.
An explosion early Sunday morning collapsed portions of the mine.

The miners are believed to be about three kilometers from the mine's entrance. Officials said they carried only six hours of emergency oxygen, and as time goes on, hopes for their survival are fading.

Family members have gathered at the mine's entrance to await word of the fate of their loved ones.

Jo Stuart
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