Category Archives: Finance

The Heavy Impact Of Vat On The Technology Sector In Costa Rica

The Internet of things, artificial intelligence, big data, robotics … 

Are some of the advances that have been made in recent years with the aim of simplifying various tasks of our daily lives.

But if there is something that even science and technology, no matter how advanced, have been saved from: Compliance with the tax laws of the country they operate in.

There is no company that escapes its obligations to the State, regardless of its level of technology.

Companies established in Costa Rica, have to pay Value Added Tax (VAT), according to the new law No. 9635 – “Act Strengthening Public Finance”. This law came into effect on July 1, 2019.

Now, a few months in … how has VAT affected the industry? What is its economic effect? What changes have been made?
These are some of the key questions for the sector that we will address in this article about the impact of VAT on the technology sector of Costa Rica.

Taxed Technology

To start, a little background info: Before July 1 2019, what existed was the General Sales Tax (IGV – Impuesto General de Ventas), which was 13% and only applied for the purchase of products.

The new law not only came to replace the IGV with the Value Added Tax (VAT) but also to extend it to previously untaxed services.

With some exceptions, we now pay 13%, 4% or 2% for conultations, medical services, design, education, remodeling of properties, aesthetics, recreational services and others.

Regarding the purchase of technological products and services in the country and abroad – antivirus, licenses, software, computer programs, entertainment platforms – the maximum rate of 13% applies.

It also covers equipment maintenance services, custom software development, application development and network maintenance.

Blow to Competitiveness

Although the objective of the law is positive in trying to alleviate the fragile situation of public finances, it is doing so at the cost of the profitability and competitiveness of many companies, including technology.

When previously small companies only needed to hire accountants on an occasional basis, today they permanently require their services in order to fulfill the process in a timely manner; every month.

This translates into a minimum of three hours of work, which, according to the College of Private Accountants of Costa Rica, means a monthly outlay of about ¢ 72,500 (the professional time is set at ¢ 24,163). This equeals to about 130USD.

Another point to take into account is that the one who assumes the payment of VAT is the customer and the supplier is only limited to collecting the tax, generating a considerable increase in the price of services.

Let’s look at the impact of VAT on the technology industry, reflected in a hypothetical case. Suppose you have a small software company dedicated to the sale of licenses inside and outside of the country. Although for exports it will not involve any change – the tax is territorial and therefore does not apply to consumption abroad -, in relation to local sales, which are subject to VAT with a maximum of 13%.

In practical terms, this means that, if before July 1, you sold a license for $ 200, after that date you must add the $ 26 tax, for a total of $ 226 (more than ¢ 15,000 difference from at the original price).

Faced with this scenario, the provider faces two equally complicated scenarios. One is to absorb the cost of VAT and the other is to lower the service fee so that the customer continues to pay the same or a portion of the tax is transferred.
In both cases, it would be sacrificing profitability and competitiveness in exchange for not affecting the customer’s ability to consume.

A little Extra on Top – Electronic Invoices

One of the steps prior to the implementation of VAT in order to reduce tax evasion was the adoption of the mandatory electronic invoice, since 2018.

With all of this and the benefits that this entails for the taxpayer, such as greater security and integration of operations, it is still an additional investment.
Although the Hacienda’s free platform exists, there are those who prefer to hire one of the 26 suppliers authorized to provide the service, the cost of which can be up to ¢ 50,000 for the issuance of 1,000 documents. (About 90USD)

So far, we have ¢ 72,500 (130USD) monthly accountant fees, plus ¢ 50,000 (90USD) of the electronic billing package, for a total of ¢ 920,000 (1630USD) per year.
And if we add to this the training of personnel and the eventual implementation of ERP-type business management systems, the sum could become much higher.

Does this mean that the new Fiscal Plan is bad? Do we return then to the previous Sales Tax and paper bills?

Neither one nor the other. This article simply limits itself to showing the reality as it is, without ignoring the sacrifices and investments that all change demands for those involved.

What other effects does the new law have on technology companies?

What is the best strategy to face them without compromising future stability and solvency?

Tell us in the comments and we continue discussing the impact of VAT on the technology sector in Costa Rica.

To read the original article on our site in Spanish click here

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How and Where To Invest Your Money As Student?

Generally, most of the students stay concerned about scoring good in their exams and searching for their dream job. Few others are more lined up in some extra-curriculum activities or sports. But there are few creative students that are always looking for some handsome investment opportunities.

In case if you are also excited to begin with strategic investments, it is good to go through the expert tips regarding how and where to invest as a student. We understand that you have limited sources of money and cannot take more risks; in such situations, expert guidelines can help you better plan your initial investments.

Invest Your Money As Student

Below we have highlighted a few details about how and where you can invest money for fruitful returns:

  • Gain more knowledge:

The very first thing you can do to make considerable profits as a student is learning about the best investment strategies in the market. The experienced investors have written several books to assist beginners in this task. These guidelines can help you better to analyze bonds, stocks, and mutual funds. In case if you find these books too expensive to buy; prefer to get them through online and offline libraries. Take some time to understand performance of top-rated stocks and study investment charts.

  • Pay off your debts:

Chances are that you are desperate to invest money to earn more, but it is not always so easy to risk your hard-earned money. Experts advise students to get started with pending debt payments first. It will help you avoid heavy interest rates in the future, and you can naturally save more. Soon, you will have more funds to invest in other areas to earn high profits.

  • Choose a brokerage:

When you are mentally prepared to move ahead with investments, it is the right time to open your brokerage account. Generally, there are two main choices: online discount brokers and traditional brokerages. For the first case, you can enjoy online trading with extended support of software and computer programs. Whereas for the second type of investment, you may need advice from experienced brokerages.

  • Investment diversification:

Putting all your money into a single big investment is a bad decision. Rather, you should divide the money into multiple smaller investments. It is good to keep extra funds in the bank account to handle the emergencies. Keep on judging market ups and downs and spread out your investment choices. It can also help you boost your returns and portfolio in the long run.

  • Start on time:

There is no point in delaying your investments. Rather, you should start early so that you can learn important concepts. It is good to check behaviour of various stocks online and then make strategic plans by consulting some experienced investors.

Another amazing option for students is to buy silver bullion bars when they are at a low price and then sell them when price goes up. It can help you to make considerable profits. Start by saving some amount right from the beginning days of your college education and then invest in silver bullion bars to multiply your returns.

  • Buy Investment Property:

In case if your family or friends can support you with this, it is good to purchase a valuable real estate or some rental property near your college. You can rent out rooms in this property to manage mortgage payments and with time, it can also generate a steady stream, of profits. Once you are done with your college, you can sell this property at a considerable profit or keep it rented out for continuous earning.

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How and where to invest your money as a student?

Before we start evaluating the methods in which a student can invest his money, we will start by explaining why is it necessary to start saving from an early age. For the last few decades, the economic market has been going through a tumultuous phase and under no circumstances can we guarantee that the value of money today will remain the same tomorrow. Thus, to steer away from a situation like this, and make all ends meet, a student must start saving from the rags and attempt to grow it through investment. Investing will not simply multiply the funds that you are starting with; it will further enhance your understanding of the market and render strapping strategies to wisely capitalize your resources. In the following section, we will be jotting down the wisest ways of investing your money as a student.

invest your money as a student

  • Invest in assets

Your plan of investing in assets must be a well-calculated one; rather than resorting to materials that are bound to be intervened by technological advancements and will thereby, alter their characteristics over time, a student should opt for assets whose value will increase with time. Additionally, apart from cryptocurrencies, there are no other forms of currencies whose value will rise in the forthcoming years. When you start trading currency, there will always be another individual involved in the mechanism and on some level, you will be asked to compromise with their terms. However, the only mindful path to choose from here would be investing in banks that depend on the commission spreads from the sale and purchase for their revenue. The source of reliability is enough to intrigue the young generation and bear unprecedented benefits for the brokerages conducting the transaction.

  • Shares and equities

Shares and equities refer to your stake in a company; meaning, once you invest in them, you will be granted an equal share in their ownership and voting rights with one vote per share. Once you have invested in, you will start receiving the dividend from the company at least two times a year; although certain firms generate dividends four times throughout a year. The best part about these shares, say for instance in investment casting, is that they will furnish you with the predicted amount once your investment starts growing. Additionally, you will also have access to their income as shares in these companies usually increase and guarantee portions of the increasing dividend. Nonetheless, if you have doubts regarding the results, you can invest in equities that require much smaller amounts and are cheaper to hold.

  • Cash in bank

Lastly, the safest option to invest your money as a student would seemingly be the bank; but investing cash isn’t the most profitable idea given its low rate of return. The interest rates are higher around the inflation which directly reinforces the fact that your money is gradually losing its value. Nonetheless, if you are planning for the long-term ahead, you can either deposit it in the savings account or a fixed deposit account. Keeping your money in the fixed account for at least 4-5 years will generate escalated rates of interest; but, you will not be able to access that stipulated period.

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student loans

Starting a business with student loan debt

A student loan can make you feel like it is taking over your life and your life will never be the same again if you don’t repay the loan. But you should not feel like that because it is still very possible to start a business when you still have the loan and if it will be of any consolation, you are not alone. Student loan stands at 1.3 trillion dollars and the credit card loans are on the rise but people are still starting new businesses. To make it possible, follow the following tips and keep your debt in control and manage your business. For any type of help please check moneyloanforu.com.

Get the student loan debt under control

Getting your debt in control should be the first thing you should do. In most cases, you will feel that you don’t have enough cash flow for your business if you make payments to the loan provider every month. To free up the cash flow, you will need to consider other options of repaying a debt like:

Consider income-driven repayment for your federal student loans

student loans

Most loans providers don’t provide you with all the options for repaying your loan and you might end up incurring penalties for defaulting the loan that adds up to 50, 000 dollars. Most people don’t know their repayment options and if that’s you, you need to do some research about it. For example, you can be eligible for income-driven plans. The plan is offered through the department of education and the payments are capped at a percentage of the discretionary income. If your income is capped, you will be able to free some money that you can invest in your business. And once your business has picked and you are making some good money, you can consider putting more towards your student loan.

Refinance your student loan

If your credit score is not that bad, you can be able to refinance your student loan whether it is private or Federal loan. By refinancing your loan to a lower rate and making it a longer-term, you will be able to free up some money to invest in your business. Student loans interest rates are deductible so refinancing your loan is one perfect way of lowering the interests and get a tax break that will allow you to concentrate on your business.

Consolidate your credit card debt

Credit cards debt has higher interest rates and this could be a problem for you especially when you are trying to start a business. The interest for credit card debts can be as high as 100 dollars in a year depending on your rate. I bet you can agree with me that is a lot of money, money that you can use to contribute to your startup. Consolidating your credit card debt is one good way of managing your debt. Maybe you can use a no-fee transfer to save on interest. Or you can even get a personal loan to manage your credit card debt and you will settle the personal loan later as they don’t have much interest as credit card debts.

Find more ways to cut your other costs

Once you manage to keep your debts under control, find for more ways to manage your other costs. For example, you can decide to move to a location that has a lower cost of living where you will be able to manage your monthly cash flow without much strain. You will save more money and you can put the money into your business idea. But you don’t have to move to cut your other costs, there are plenty of things you can do to lower your costs. You can cut your spending on entertainment and transportation.

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Students Loans Advice: The Best Wonga Alternative For You

If you have already fallen into such a problem or a moment of emergency that you need money at that instant and you have already look for a small term loan for a payday loan then you probably have come across wonga. so wonga here is basically a lender organization that is FCA approved and one of the most popular landing organizations in the region of UK and Spain and many other parts of the world. Of course, this is a really good solution to a problem but there are also some people who are facing a lot more difficult situation that is not quite helpful with the APR ratio of wonga.com. So, in a situation similar to this you are probably going to need an alternative to Wonga loans in terms of short term loan or payday loan.

What exactly is a short term loan and why is it necessary for you?

Students Loans Advice

Credits: Latina Moms

Just suppose you are a working man with a happy and sweet family. All of a sudden because of a storm or any other natural phenomena, or in such a situation where your child needs to be paying some more amount of money in their school, or even that you are facing a situation where yourself or any member of your family have fallen sick all of a sudden and needs to pay the hospital bills right away. You already have all your monthly expenses on top of you and there is yet another 10 to 12 days to go for your employer to provide you your next monthly payment. And right now you don’t have that sufficient amount of money you are going to be needing to get out of this emergency situation or to tackle the way it is. Just sitting down on the ground and having your hairs ripped off from your head while bursting out in stress is not just the solution right? At this moment what you are probably going to do is look for a short term loan for a payday loan so that you can have all your emergency expenses be paid for and also have the ability to pay off the loan as soon as you get the next month’s payment from your employer respectively. Basically here it means that a short term loan is more likely to be used for a number of reasons which are more of an unexpected emergency. And also for those who have a bad credit report on their financial statement may face some significant amount of difficulty to obtain or to approve a loan from a bank or other lending organizations because they have strict criteria that they apply all the time. Now you understand that a short term loan is also known as a payday loan is basically designed for the needs of your which will prefer to a perfect solution to the help of your financial emergency when you need it the most with just a blink of an eye.

The low APR rate, along with the flexible payment plans and also very loan amounts and quick application decisions and many much more extra facility and friendly, flexible attitude of loanski is going to be helpful to the financial situation that you are facing right now. The interest rate of wonga has some difficulties to be paid back. And there is exactly why it is time for you to choose a proper alternative solution to wonga loans. As considering this Loans like Wonga can be found at https://www.loanski.co.uk if you choose loanski then it is one thing that is to be sure that you are not going to be disappointed by the performance or even the service provided towards you by loanski.

Always have your research prepared before you take a loan

As this is a short term loan so that means you won’t have to keep mortgage any of your property or any other security amount of money or other properties to ensure that you are not going to run away with the loan. Short term loans are always there to help you in the moment of your eminent need and aside from wonga, the loanski is to be considered the best wonga alternative ever.

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