In this short article you will find some highlights from the new April 2010 Business Barometer report done by Deloitte. For their analysis this company involved a total of 110 companies in Costa Rica who employ 57 100 people and have an annual turnover of US$10 million

1. Most of these companies in Costa Rica aim to maintain or increase their staff levels in the next year. Only seven in 100 of them say they may reduce their staff levels.
2. These employers have no plans for layoffs in 2011, in fact 46.3% of them plan to hire more staff.
3. This increased employment outlook means that 74% of respondents felt that they would be paying their workers more over the next 12 months, no one considering a reduction in pay.
4. For 2010, most respondents (46.7%) said they expect the wages to increase by about 5%. For the same year expected inflation by 49% of respondents, would be between 5% and 7%.
5. This projection is similar to that estimated by the Central Bank, whose inflation target of 5% this year.
6. In line with the recovery in Costa Rica, 43.3% felt that production last year improved and 81.8% of respondents believe their companies will expand over the next twelve months.
7. 66% believe the economy is now in a better position than a year ago, 78% believe that there is now a better investment climate, and the same percentage said that unemployment is lower, compared with a year ago.

Costa Rican lawmakers recently passed legislation that will levy a new property tax on houses valued at more than 100 million colons (~$180,800). This nex tax will be used specifically toward the fight to eliminate shanty towns in Costa Rica.There are roughly 390 shanty towns and government estimates put the number of families living in inadequate housing at 40,000.

It is actually called the 'Solidarity Tax For the Strengthening of Housing Programs' or 'Ley Impuesto Solidario Para el Fortalecimiento de Programas de Vivienda' (in Spanish).The solidarity tax is to be paid in addition to other property taxes owed to the government.

The new tax is expected to raise about $45 million a year and is going to be in place for 10 years, according to The Beach Times, an English weekly in Guanacaste, Costa Rica.

The amount of the luxury tax owed depends on the market value (defined by municipality and tax authorities) of the home, excluding the value of the land on which it is constructed. Residences valued between 100 million colons ($180,800) to 750 million colons ($1,356,000) will be charged 0.25 percent of their market value, according to Petersen, who also runs the website costaricalaw.com. Homes appraised above 750 million colons ($1,356,000) but below 1.25 billion colons ($2,260,000) will pay 0.35 percent. Homes valued at above 1.25 billion colons ($2,260,000) but below 1.75 billion colons ($3,164,000) will be taxed at a rate of 0.45 percent. Anything valued above that will be charged 0.55 percent.

The law leaves it to property owners to figure out taxes owed and declare it to the tax authorities. Inspectors will check to ensure accuracy.

"The tax would be paid on a yearly basis and would be due on January 1st of each year," said Petersen.

The tax excludes the value of the land on which the homes are built. In other words, it only applies to the value of the structure on a particular lot. "The tax does not apply to the land, just the construction located upon the land," said Petersen.

"If your land is valued at $184,000 and your home $184,000, you would pay only $460 a year," said Butler. Thus, even if the total market value of the home is actually $378,000, the tax payment owed would only be $460. The majority of homes fall out of the taxable category, according to Emerald Forest Properties. Therefore, the tax is unlikely to affect as many people as some fear.

What do you have to know as house owner?  If you prefer to calculate the luxury tax value on your own, you should consider reading the table of construction values ('Manual de Valores de Base Unitarios por Tipología Constructiva’), which is published by the tax authorities ("Dirección General de Tributación") by the following link: http://tinyurl.com/yh4arzf

If the tax declaration was not made correctly, you will have to pay a fine, which can be five times the tax amount you usually would have to pay.  If the house owner does not do any luxury tax declaration, you will have to pay a fee, which is ten times the normal luxury tax amount.

We help you with the tax value calculation. You may contact us by email or our office phone in San José.

Public construction sector records a steady growth since 2007. In January 2009 growth increased by 21% than in the same month the year before.

These statistics are investigated by the index of monthly economic activities from the Costa-Rican central bank. This indicator makes for a monthly estimation of changes in production and investment.

One of the factors for this positive impulse in the construction sector is the improved capacity in execution of the regarding projects. For example the public health insurance (Caja Costarricense de Seguro Social) has the second largest budget of all public institutions. 57.5% of this budget was used for new construction projects in 2006. According to information from the institution, this rate increased to 94% in 2008.

The institution for electricity and telecommunication (Instituto Costarricense de Electricidad) has the third largest budget of public institutions and invested 84% in 2006 in construction projects. This value increased to 90% in 2008. The growth in the public sector compensates the current decrease in the private sector, which was 8% in 2008.