A few dear readers have asked variations on similar questions regarding the bills and sales receipts they get from restaurants located in tourist hotspots such as Jaco and La Fortuna, close to where Will Smith is currently filming After Earth.  A notable question came from a reader named Stacy who told us about the time she dined at a nice restaurant in Quepos and she asked the waiter to bring the check:

“OMG, what is this 23% Costa Rica tourist tax?”

Hello Stacy, thanks for your question.  That 23 percent you saw on the receipt from the restaurant does not entirely represent taxes.  Only 13 percent of the meal price was assessed on value-added taxes (Impuesto al Valor Agregado, or IVA in Spanish).  The remaining 10 percent was allocated to the waiter’s tip.  It looks like the restaurant did everything correctly, particularly if it itemized and indicated the IVA tax and tip separately on the bill.

What the law says about taxes

There are 17 different taxes that some Ticos could reasonably expect to pay at some point in their lives.  Here’s a list of the different taxes, and some of them will contain links to previous relevant articles that have appeared in The Costa Rica Star.

-Wireless spectrum tax, levied on communications
–Airport exit
-Aircraft, vehicle and vessel
-Casinos and gaming parlors
-Foreign banks and financial institutions
-Alcoholic beverages (this is built into the retail sales price)
-Soft drinks and cosmetic soaps
-Value-added sales tax (IVA)
-Selective consumption
–Real estate transfer
–Income and earnings
-Profits and capital gains
-Aircraft, vehicle and vessel transfers
-Capital gains on financial instruments
–Luxury real estate
-Fossil fuels
-Fiscal stamps (timbres) for the benefit of educational and cultural programs

The current IVA tax rate, 13 percent, may be raised to 14 percent in the near future as part of the Fiscal Reform plan proposals that have been hotly debated at our National Assembly for about a year now.  The assessment and collection of some of the taxes assessed above are also slated to be modified by the Fiscal Reform plan.

As you can see from the list above, Stacy, there is no such thing as a “tourism tax.”

What the law says about tipping:

The 10 percent tip is authorized and regulated by Law Number 4946, known as the Ley de Propinas (PDF).  In essence, the law states that 10 percent of all sales on meals and beverages at bars and restaurants should be set aside as tips.  The way these tips are collected differs from one establishment to another.  At tourist hotspots like Jaco, Quepos and Tamarindo, establishments tend to itemize IVA and tips on their sales slips in the spirit of transparency and information.  Businesses that heavily cater to tourists are more likely to be under the close scrutiny of the national tourism board (ICT), and thus ensure that their patrons are well informed about how their monies are being collected.

The tip and tax collection process is handled differently outside of tourist establishments.  At your neighborhood soda or coffee shop, you are still being charged 13 percent IVA and a 10 percent tip, although it is not itemized.  Many retail stores, bars and restaurants simply adjust their pricing accordingly, and the wait staff collects their tips at the end of the day or on their payday according to the sales receipt.  Some waiters, waitresses and bartenders split the tips collected among themselves to compensate for those days in which some did not sell as much as others.  Food service and hospitality workers should be paid a minimum daily wage, and contributions to La Caja should be deducted and matched by their employers.  This is the way it should work, but unfortunately one cannot expect that it will take place everywhere.

Tipping Customs

Tipping out-of-pocket in Costa Rica is entirely up to the patron.  Tipping collection and disbursements fall under the responsibility of the employer, but it doesn’t hurt to tip service workers a little extra if you feel like they deserve it.  It helps to know that once the bill is paid, the waitress or waiter will receive their tips and that the tax will be paid.  Itemizing on the sales slip makes sense, but many Ticos don’t feel like doing math after a nice meal, or after a few drinks, and thus enumerating tips and taxes is not common outside of touristy spots.

With all the above in mind, one must always keep in mind that some tourist establishments tend to be very pricey.  A meal for two or four diners at a restaurant within a luxury beach resort can easily run over $100, so adding 13 percent IVA and 10 percent tip will make anyone’s eyebrows raise a bit.  For people like Stacy we recommend asking if the prices on the menu include IVA and tip before placing an order.  At other lesser known -yet very recommended- tourist locations, the prices are far more reasonable.