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Moody’s lowered its outlook for Costa Rica from ‘stable’ to ‘negative’ this week over concerns about the country’s rising debt burden, fiscal deficits and stalled legislation to address the problems. Some friends are seriously looking into Panama for doing business, seems to be a ‘friendlier business environment.’
Would you care to give us some feedback on the news you are publishing? What is it exactly you wish to discuss in this Discussion Forum?
Moody’s and all the other credit rating agencies were less than useless during the world’s worst financial crisis and gave nobody any notice of the ENORMOUS problems to come…
And with regards to your second point about Panama being a ‘friendlier business environment’ – would you care to give us some reasons why you think this is true?
And your “friends” are seriously choosing to live in Panama because of Costa Rica’s “… rising debt burden, fiscal deficits and stalled legislation to address the problems”?
Can we name many countries that don’t have these exact same problems?
Scott
Moody’s and all the other credit rating agencies were less than useless during the world’s worst financial crisis and gave nobody any notice of the ENORMOUS problems to come…
Maybe after making some big mistakes Moody’s have smartened up as some good businesses do. You are referring to past history. The business community wouldn’t rely on them again if they didn’t have credibility and usefulness. As an aside, only Wall Street which helped give you a good start in Costa Rica is back to the same old stuff. See The Week, this week’s cover story.
I agree that CR is in real financial trouble so probably foreign investors will be hit with more new taxes AGAIN!!Panama continues to enjoy the strongest economic growth in Latin America. It benefits from stable and consistent economic policies. In 2013, the economy is expected to continue to be one of the fastest growing in the world with predicted growth of 7.5% following expansion of 10.6% in 2012, and 10.5% in 2011. In 2012, Moody’s improved their outlook for Panama from “stable” to “positive”. Export .gov
For the past several years, the CR government has passed law after law in order to tighten up its tax structure to avoid evasion and keep receiving loans/bailouts from other countries and international banks. Can’t wait for Oct. 3rd report from Edgar Ayales, Minister of Hacienda, [u]“Fiscal Consolidation Plan” that will probably raise taxes. The writing is on the wall. Hopefully an expert will explain the new PLAN and its’ impact for folks in Costa Rica. Gotta go, there’s a meeting for the new “1856 Patrol.”
Panama’s [url=http://www.nacion.com/economia/indicadores/Deficit-balanza-comercial-Istmo-subio_0_1370662932.html]commercial deficit is the highest in Central America[/url] ….
El informe de la Sieca detalla que durante el período indicado Panamá registró el mayor déficit comercial con un 30,9%, equivalente a $3.866 millones, seguido de Guatemala con el 19,9% por $2.490,2 millones.
El déficit comercial de Costa Rica se ubicó en el 16%, por $2.000,7 millones; El Salvador, 13,8%, en $1.733,4 millones; Honduras, 12,2%, en $1.525,4 ; y Nicaragua, 7,2% , equivalente a $901,1 millones.
Finance minister Edgar Ayales is supposed to lay out proposals for new taxes this week. What to expect? A value-added tax (VAT), a one-time tax on all the wealth held by individuals in the form of “renta mundial”, a tax on money earned elsewhere in the world by Costa Rican taxpayers? Will SS payments be taxed? A special tax on luxuries and a tax on financial transactions? Will they eliminate the many exemptions and exonerations that are now contained in the Costa Rican tax laws? Will the new tax plan be voted on by the legislature or will the President just issue a binding decree while she dismisses a study calling her least popular president in Americas?
It’s my understanding that with the Costa Rica/U.S. double taxation agreement – Costa Rica will NOT be able to tax SS payments … I will try and get one of my contacts to confirm this …
[quote=”Scott”]It’s my understanding that with the Costa Rica/U.S. double taxation agreement – Costa Rica will NOT be able to tax SS payments … I will try and get one of my contacts to confirm this …[/quote]
If the latest information about required participation in CAJA and the associated percentage fee of declared monthly income (10%-13%) from your residency application is correct, I’d say CR is shooting themselves in the foot when it comes to attracting investment or higher income expats. That’s one heck of a tax for one to swollow for the pleasure of residency!
While we may look at “income” taxes and believe they won’t subject folks to double taxation how about those of us attempting maintain health insurance in the US (just in case you need the best care available) who will now be slammed with a healthcare TAX of $600+ /month for health insurance in CR should we apply for residency? It makes it a whole lot less attractive to spend that much time in CR. It’s a rather large TAX for services not likely used for anything other than routine care.
Governments do a good job of milking folks with money. But much like milking a cow if you pull the utter too hard you get kicked in the chest and watch as your cow walks off to a greener pasture.
Well, the Minister of the Hacienda just released “his plan.” He wants more discussion and feedback on how to fix the problem. He said that public salaries should be a top priority because they consume 70% of the national budget and public jobs pay on the average 23% higher salaries than in the private sector for similar jobs. Since we are in an election cycle with a new govt. coming into power in February, most economists say that nothing will happen this year and 2014 will remain the same, an increase in domestic and foreign debt, deficit and generating more pressure on interest rates and the exchange rate.
The fiscal deficit of the Central Government in August reached the equivalent of 3.4% of production, higher than the 2.9% that was reported in August last year.
Here are some comments from my friend Randall Zamora who is most definitely an expert in taxes in Costa Rica …
“The main concern for foreigners living here is “Renta Mundial” but what this means to the Government is to tax investments made outside of Costa Rica and ONLY if the investments are repatriated, so we are not talking about taxing SS.”
Hope that helps ….
Scott
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