Downsides of Costa Rican Tax Proposition

by Mira Patel, News Staff Writer

September 12, 2007

On the island nation of Costa Rica, taxes on the lucrative online casino industry are sky-high. If bill 16.450 is passed into law, an even heavier tax burden could send many online casinos bolting from the country, leaving an untold number of citizens unemployed. The Partido Acción Ciudadana is currently in deliberations over a weightier tax on sportsbook and other online gambling operations, claims English-language newspaper AM Costa Rica. The proposed tax levy on internet casinos is even higher than the one that stalled in negotiations last year, the paper reports. The Ciudadana is classifying the potential tax as a “licensing fee,” although the nation currently has no licensing procedure for online casino operations.

The proposed online casino tax would be based on a tiered stricture based on how many workers an online gambling outfit employs. On one end of the tax spectrum would be groups with less than twenty paid employees, owing 15 million colons (the currency of Costa Rica) a year. That translates to twenty-eight thousand dollars. The highest tax bracket would be made up of online casino businesses with more than sixty-one employees. Such companies would owe twenty-eight-point-four colons, or fifty-four thousand six hundred American dollars annually.

The concept of such a high tax already has some online casino merchants starting to sweat. There are those who consider business to be unprofitable at such a tax margin, who claim that they would close up shop should the measure pass. That’s bad news for the Costa Rican employees of these online casinos, most of whom are young, English-speaking, and poor. AM Costa Rica reports that major online gambling site Bodog.com has already moved its operations to Antigua, which is much friendlier to internet casinos.
 

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