(In 2nd paragraph, corrects benchmark interest rate to 8.9
percent, not 9.05 percent)
SAN JOSE Jan 21 Costa Rica will increase the
tax on foreign investors, levying a rate of up to 38 percent, if
they seek to transfer profits from share and bond investments
overseas, in a bid to stem potentially destabilizing capital
Low interest rates in developed economies have encouraged
investors to seek higher returns in Costa Rica, where the
benchmark interest rate is currently at 8.9 percent.
The new law will increase the current 8 percent tax on
foreign investments by up to 30 percentage points. Under the
proposal, the exact amount would depend on the currency of the
investment, the yield and the maturity. It would not apply to
foreign direct investment.
Banks with foreign clients will also have to deposit up to
25 percent of the value of any investment they make with the
central bank, earning no interest.
"With these measures it will be possible to reduce inflows
of capital which can hurt the national economy," the law said.
Brazil also slapped taxes on foreign investments - including
on short positions in foreign exchange derivatives, on foreign
purchases of local debt and on credit card purchases abroad - to
stem the overheating real currency.
Costa Rica, a Central American country of 4.5 million known
for its beaches and high-quality coffee exports, has a fiscal
deficit of 4.5 percent of gross domestic product.
(Reporting by Isabella Cota; Writing by Krista Hughes; Editing
by Leslie Adler)