Illegal trade generates losses of more than ¢1 billion colones for the Costa Rican treasury

QCOSTARICA – The growth of the illegal trade in Costa Rica is causing significant financial losses to the economy and threatening the health and safety of Costa Ricans.

This was demonstrated at the Forum “Tax Simplification as a Stimulus for the Formal Economy: Analysis of the Case of Illicit Trade in Costa Rica,” held on Wednesday in the Legislative Assembly.

“The fight against illegal trafficking is a task that requires the coordinated work of different sectors. This is part of what drives us to hold meetings like this forum,” said Julio Lizano, Chairman of the Board of Directors of the British-Costa Rican Chamber of Commerce (BRITCHAM).

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According to data from the Costa Rican Chamber of Commerce’s Illicit Trade Observatory, illegal trade in its various forms impacts multiple sectors of Costa Rican society. Its economic impact is estimated at ¢1 trillion colones per year, equivalent to 2.6% of gross domestic product (GDP) and 10% of household consumption.

The lack of strong regulatory frameworks and the complexity of the tax system are key factors facilitating the expansion of these organized crime networks in Costa Rica and the Central American region.

Lawmaker and former presidential candidate Eli Feinzag pointed out that “excessively complex tax systems, with many taxes, high and differentiated rates and numerous exemptions, encourage evasion and avoidance and provide incentives for illicit trade. They therefore result in less revenue collection, less safety for consumers and contribute to the proliferation of organized crime.”

The consequences of illegal trade transcend national borders and affect the economic and social stability of countries. This requires a coordinated international approach and the creation of public policies that strengthen the legal and customs systems in the region.

According to the British Ambassador to Costa Rica, Ben Lyster-Binns, “counterfeiting, piracy and illegal sales of products represent billions of dollars in lost tax revenue for governments, undermine legitimate businesses and expose consumers to poorly manufactured and unregulated products, with potentially serious health consequences. Illicit trafficking is a global challenge that must be addressed through a coordinated and multi-faceted approach at international level.”

Alejo Campos, Regional Director of Crime Stoppers CBLA and special guest at the forum, warned that “it is important to understand that behind the illicit trade, especially smuggling and counterfeiting/counterfeiting, lies a network of transnational organized crime, which is active in all countries along the route and is connected to national criminal structures.

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They control a logistics chain, with the collaboration of corrupt actors in a system of illegal economies that includes related crimes such as money laundering, drug trafficking, illegal associations and even terrorism. Illicit trade is a fundamental part of the portfolio of criminal goods and services of what we call ‘criminal convergence’, facilitated by kleptocracy. It is no longer just about customs violations or tax evasion.”

Illicit trafficking in Central America has reached alarming levels. A study by the Inter-American Development Bank (IDB) shows that illicit trade in the region represents between 3% and 5% of gross domestic product (GDP), amounting to billions of dollars lost every year.

In Guatemala and El Salvador, this type of trade now represents as much as 40% of the market for certain products, such as cigarettes and alcoholic beverages. These revenues are not only lost to the states, but are also captured by criminal organizations that extend their influence to other illegal activities.

In Costa Rica, the consequences are equally devastating.

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The International Criminal Police Organization (Interpol) has noted that smuggling of illegal products, especially medicines and food, has increased by 30% in the past three years. This has led to an increase in risks to public health, as many of these products do not meet quality standards and may contain hazardous substances.

Illicit trafficking networks are also linked to drug trafficking and money laundering, exacerbating security problems in the region.

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