International airline tickets: the change is in the tax base, not in the rate

By: Gabriela Páez | Tax Manager - EAS LATAM

In a market where tickets are purchased online, through international platforms, digital travel agencies, and global reservation systems, the ICT is updating its rules to close gaps, organize the collection of these taxes, and prevent certain transportation-related charges from being left out of the tax calculation.

1. What the new decrees regulate

The Executive Branch issued three new regulations related to taxes administered by the ICT on international passenger tickets. Executive Decree No. 45738-MP-TUR regulates the 5% tax on the value of tickets sold in Costa Rica for international travel by air or land. Executive Decree No. 45739-MP-TUR regulates the 5% tax on the value of tickets whose route originates in Costa Rica, for any type of international travel, when the previous tax has not been collected. Executive Decree No. 45740-MP-TUR regulates the fixed USD 15 tax for entering the country by air with a ticket purchased abroad.

The common message of the three regulations is clear: the ICT seeks more precise rules to collect, declare, control, audit, exempt, and, when applicable, refund taxes associated with international passenger transportation.

2. The reason for the change: e-commerce and price segmentation

The reform responds to a different commercial reality. Today, the final price of an airline ticket may include multiple items: base fare, fuel, baggage, seat selection, date changes, penalties, and other ancillary charges linked to international transportation.

Under previous approaches, some of these components could appear separately from the base fare of the ticket. That segregation reduced the base on which the 5% tax was calculated. The new regulations seek to close that space by incorporating a broader definition of the value of the ticket or international passenger fare.

The tax rate does not change. What changes is how the base on which it is calculated is identified. In practice, this may increase the tax charged to the passenger when ancillary charges are directly related to transportation.

3. Mini example: before and now

The following example is illustrative and does not replace the analysis of the itinerary, place of sale, origin of route, currency, exchange rate, exemptions, refunds, or specific ticket conditions.

In this example, the 5% tax would no longer be calculated only on the USD 300 base fare, but on USD 375, by including ancillary charges directly related to international transportation. The individual difference may seem small, but in high-volume operations of airlines, travel agencies, or digital platforms, the cumulative effect can be significant.

4. Operational codes OU, NW, and ticket nomenclature

Ticketing systems may show operational codes such as OU, NW, or others. These names should be maintained when they come from the ticketing system, operating forms, or industry nomenclature. For purposes of this article, the code is not renamed; the tax treatment associated with it is explained, and the base on which it is calculated or reported is reviewed.

5. VAT remains, but it is not administered by the ICT

An important point is that these regulations do not modify the Value Added Tax (VAT) regime. VAT maintains its own rules, filing process, and administration under the general framework of the Ministry of Finance and the General Tax Directorate (DGT).

The ICT administers the specific taxes regulated by these decrees, but it does not administer VAT. Therefore, when reviewing the final price of a ticket, companies must properly separate taxes administered by the ICT, VAT when applicable under the general rules, airport fees, security charges, fuel charges, and other commercial items.

6. How this may affect the final ticket price

For the consumer, the change may look like an increase in the final price when additional services are purchased, such as baggage, seat selection, or itinerary changes. However, from a technical perspective, it is not necessarily a new tax rate, but rather a broader and more auditable calculation base.

For companies, the most relevant effect is not only the price, but traceability. Airlines, travel agencies, tour operators, and companies that frequently buy tickets should review how their systems identify place of sale, origin of route, currency, exchange rate, ancillary charges, refunds, exemptions, and modified tickets.

7. Greater responsibility for collection agents

The regulations also reinforce the obligations of collection agents. These parties must collect the tax, declare and remit it within the applicable deadlines, register and keep their records updated in the ICT-Contributor module, maintain supporting documentation, and facilitate tax control processes.

In addition, the ICT may request tax-relevant information, including receipts, invoices, BSP reports, head office sales reports, ticket images, flight manifests, and any other documentation related to the sale of international transportation services. BSP means Billing and Settlement Plan, the system used to settle airline ticket sales.

The new ICT regulations reflect a clear trend: tax control is adapting to e-commerce and more complex sales models.

The price of an airline ticket can no longer be analyzed only from the base fare. For purposes of taxes administered by the ICT, the relevant value may include ancillary charges directly related to international transportation.

For companies, the challenge is not only to collect the tax correctly. The real challenge is having systems, reconciliations, and support that show how the taxable base was calculated, which items were included, which taxes were charged to the consumer, and which amounts were reported to each competent administration.

References

• Executive Decree No. 45738-MP-TUR. Regulation for the collection, control, administration, and audit of the 5% tax on the value of tickets sold in Costa Rica for international travel by air or land.

• Executive Decree No. 45739-MP-TUR. Regulation for the collection, control, administration, and audit of the 5% tax on the value of tickets whose route originates in Costa Rica, for any type of international travel.

• Executive Decree No. 45740-MP-TUR. Regulation for the collection, control, administration, and audit of the USD 15 tax for entering the country by air with a ticket purchased abroad.

• Ministry of Finance and General Tax Directorate. Tax treatment of international airline ticket sales and rules applicable to Value Added Tax.

• International Air Transport Association (IATA). Best practices for taxes, fees and charges on air tickets. General reference on the use of two-character codes for taxes, fees, and charges on airline tickets.