Impact of COVID-19 pandemic in the legislation of Costa Rica

Andrea Rojas

This article lists the main changes to Costa Rican legislation in various fields and public services caused by the COVID-19 national emergency.

Labor matters: 

In this field, the Law to Reduce Working Shifts was passed, which implies the following changes: a. Reduction of working hours by 50% and 75%, if a business’ income decreases by 20% and 60%, respectively. b. Wage decreases will be made proportionally to the shift reduction. c. This wage reduction cannot be applied to women who are pregnant, breastfeeding or to disabled people.

 In regards to the measures implemented by the Costa Rican Social Security System (CCSS), the institution agreed to: a. Agreements with employers and independent employees who have debts with CCSS so that employers only have to pay the contributions of the Employee Protection Law and, Independent Employees must only give an initial payment of 5% of the arrears. b. Reduction of interest rates to 5.5% for settlement payment agreements until August 31st, 2020. c. Postpone collection efforts to employers and independent employees until June 30th, 2020. d. Reduction of the current Minimum Tax Base in health and pension insurance to 25%. e. Employees who present symptoms can resort to the Costa Rican Social Security Fund to be assessed by doctors and subsequently enjoy the disability license. 

Taxation matters :

In order to help with the upcoming crisis due to COVID-19, the Fiscal Relief Law was approved, which indicates that: a. VAT and Excise Tax for the months of March, April, and May must be declared normally but may be paid by the taxpayer until December 31st, 2020, without interest or fines. b. The second Income Tax partial payment may be deferred up to the end of the year 2020, with certain exceptions. c. For the nationalization of imports made in April, May, and June 2020, payment of customs duties may be deferred up to the end of the year 2020 with certain exceptions. d. Commercial leases for the months of April, May and June, are exempted from VAT. e. This law does not impact property tax and real estate capital gains tax.

In Banking matters:

Banks in Costa Rica, both state and private, implemented a series of measures to support its clients: a. Decrease in interest rates according to the conditions of each credit. b. Extensions or grace periods in payments of the principal and/or the interests. c. For personal loans, mortgages, small and medium-sized companies (Pymes), and credit cards, most banks are choosing to waive monthly payment for the next two or three months. d. Extension of the bank loan’s terms, depending on the income received by the debtors in the coming months. e. Extraordinary payments to the principal amount without applying early payment penalties.

In contractual matters:

The emergence of the virus COVID-19 has caused negative economic effects on the population, making it impossible to meet different types of contractual obligations. The coronavirus pandemic could be considered as exculpatory grounds for liability due to possible changes in contractual conditions, which is why it is recommended to review and analyze the contracts signed in order to determine whether renegotiation is possible, potential compensation for failure, applying penalty clauses, suspension or application of insurance policies, among others.

Immigration matters:

The main changes indicated by the General Directorate of Immigration in this area are as follows: a. Immigration will not receive new applications under any category beginning March 17th, 2020, until May 17th, 2020. b. The validity of submitted certified documents and deadlines to file documents will be extended until July 17th, 2020. c. DIMEX appointments for first-time issuances and renewals can only be made through the BCR and the Costa Rican Postal Service. Those that must be processed exclusively by the Immigration Department will have an extension for obtaining the DIMEX until July 17th, 2020. d. For tourists who entered Costa Rica on or after December 17th, 2019, the validity of their tourist visa will be extended until May 17th, 2020. e. Consulates are unauthorized to grant consular visas to enter the country between March 17th, 2020, and May 17th, 2020. f. Foreign residents who leave the country from March 24, 2020, until further notice will lose their residency status.

Public Services :

Regarding water supply for household, residential, preferential and commercial of the operators Costa Rican Institute of Aqueducts and Sewers (AyA per its Spanish acronym), ASADAS, Public Services Company of Heredia (ESPH) and municipalities, the President of the Republic and the Minister of Health, signed a directive calling on these operators, to carry out the following actions within the following 60 days: a. Not to cut service for nonpayment. b. Restore the connection of those services canceled by default.

As for the electrical service, the ICE gave the following benefit to its customers with commercial and industrial consumption, equal or greater than 2,000 kilowatt-hours per month: a. Payment of 50% of energy consumption during the months of March, April and May. The remaining 50% payment must be completed in equal tracts from July to December 2020.