After reaching several agreements with a multi-sector dialogue table in regards to a new tax on lottery prizes, Costa Rican President Carlos Alvarado officially presented a project to the Legislative Assembly.

Bill 22.354 will now be discussed by legislators to set if it comes into force.

The proposal prepared by the presidency establishes “the creation of a special tax on national lottery prizes as well as other products from the Social Protection Board (JPS) — the local regulator.” Both people and entities would be subject to this tax.

According to the document presented this week, “the tax base will be the amount of the full prize,” and the applicable fare will be 25%. It is currently estimated that the tax will only be applied to prizes higher than $400.

The JPS would be in charge of controlling the tax payments, as well as “presenting a sworn statement on the collection made each month, indicating the tax base applied to tax the prizes.”

Additionally, the General Directorate of Taxation will administer and supervise the tax, aiming to generate more funds to mitigate the economic impact that the Caribbean country has suffered during the pandemic.

The project will face opposition from several local lawmakers. Congressman Erick Rodriguez said that this is a “populist tax” and that “it doesn’t solve any fiscal problem that the country may have.”

However, the President believes that through the 25%, they could achieve savings of 2.5% of the GDP.