The most excruciating difference between business in America and business in Costa Rica is the tax burden. Costa Rica has a 58.3% tax proportion as a share of profit while the USA stands at a proportion of 36.6%; for every dollar of Costa Rican profit, 58? is taken by the government [https://archive.doingbusiness.org/es/data/exploretopics/paying-taxes]. Costa Rican businesses have several expenses that are not as large or significant in the U.S. For example, in Costa Rica, businesses must pay their employees a “thirteenth-month” salary at the end of the year. It is not a bonus because it is not a reward for a job well done, it is a mandatory wage and it must be 1/12 of the employee’s base annual pay. Additionally, Costa Rican businesses must pay 26.33% of the employee’s base annual salary into social security. This excludes the percentage of the salary that the employee himself pays.
When talking with employees and locals, the social security system is praised as well as the vacation pay and the “thirteenth-month” pay. They enjoy the guarantees provided to them by their government; they are owed *a lot* from employers simply by showing up to work. Business owners, on the other hand, claim that the burden of taxes and social security does not allow for growth and reinvestment of profits. Expansion is limited and projects are never taken on because businesses hardly ever see their profits. This is the testimony of several businesses that I had the privilege of visiting myself. Jovani Bogarin, founder of a private nature reserve Bogarin Park, exclaimed that the government runs entrepreneurs out of business without sympathy through relentless taxing. He does not see the returns from his taxes on the infrastructure and wonders where all the money goes. Another business owner said that projects are put on hold due to a lack of reinvestment funds in addition to interest expenses owed to the banks.
Personally, I see tax dollars as wasted dollars. The money is never used by the government as efficiently as it is used in the private sector. This summer, I am interning as a tax consultant at Ryan. The mission of Ryan is to liberate companies from the burden of taxes. Knowing that Costa Rican businesses are suffering due to such high taxes, I would like to eventually explore options to offer expert tax consulting services to Costa Ricans in order to spur growth in the private sector.
