Change in Costa Rica

The government of Costa Rica is debating a law that would introduce a new tax structure that explicitly deals with I-gaming companies. The bill, which is expected to pass soon, would require companies that take wagers through online and telephone services to pay a tax based on the number of workers employed by the company.

The tax bill represents the first major tax adjustment in Costa Rica in many years, and the inclusion of a structure for online gaming companies serves as a testament to the value of the industry to the nation's economy.

"The current climate is in fact very pro our industry and its likely to get really enshrined into the legal system here if it's included in the most significant new legislation affecting taxation that has been passed for the last 30 years," said Cole Turner, CEO of BoDog.com, a Costa-Rica based interactive betting operation.

Bodog's lobbyist, Luis Pereira of D.Y.N. Servicios in San Jose, closely monitors the government' actions regarding online gaming. Following is Pereira' translation of the section of the proposed bill that deals with online gambling:

The companies dedicated to receiving and processing data that generates electronic bets must purchase an operation license from the State according to the number of people employed in a dependence relation. The Ministry of Economy, Industry and Trade (MEIC, in Spanish) must appoint the proper institution to implement the registration of such companies. Those companies dedicated to receiving electronic bets will be strictly forbidden from operating in Costa Rica if they are not inscribed in this register.

For the aforementioned inscription, the MEIC will demand payment of a tariff or tax which will entitle the company to obtain its operation license for one year that will coincide with the natural year. The tariff will correspond to one of the amounts established in the following table:

In anticipation of the new tax regime, the Costa Rican government has asked online gaming operators to hold off on renewing their licenses. Although some Web sites have speculated that the government's request to delay renewal is a sign that Costa Rica may want to cease offering I-gaming licenses, the government maintains that the renewal process will be easier for everyone involved if the operators wait until the new tax system and new licensing schema takes effect.

Costa Rica's licensing law that was in effect last year expired before the new one could be passed. A newer regime with longer licensing terms is expected to pass later this year. Operators will then be required to pay the backdated fees for this year. Then at the beginning of next year they will be asked to pay for that year forward.