On October 5th, Costa Rica’s National Assembly approved the tax reform by 35 votes in favor and 22 against in first debate. The initiative increases the Income Tax, uses financial intermediaries as tax withholders and replaces the Sales Tax with the Value Added Tax (VAT). The regulation needs a second vote to be passed. The Assembly will receive comments and observations from public institutions until October 19th.

During the meeting, the ruling party Partido de Acción Ciudadana prevented the public consultation from taking place before the approval of the reform in first debate. However, legislators agreed to consult different state institutions such as the Central Bank of Costa Rica (BCCR), state banks in general, local governments, the judiciary, the Supreme Electoral Tribunal and universities until Friday, October 19th, before starting the second vote of the bill.

Under these conditions, the second vote of the bill would take place in two weeks as long as a constitutional review is not requested. If it is, the discussion will take place in late November. But if 10 deputies agree to request for the Constitutional Court to review the bill, the judiciary can take up to a month to do so.