{"id":9485,"date":"2019-03-30T11:25:11","date_gmt":"2019-03-30T10:25:11","guid":{"rendered":"https:\/\/garciabodan.com\/?p=9485"},"modified":"2025-08-11T19:57:50","modified_gmt":"2025-08-11T17:57:50","slug":"main-changes-to-the-income-tax-in-nicaragua","status":"publish","type":"post","link":"https:\/\/garciabodan.com\/en\/main-changes-to-the-income-tax-in-nicaragua\/","title":{"rendered":"Main changes to the Income Tax in Nicaragua"},"content":{"rendered":"On February 28th<\/sup>, 2019, Law 987 was enacted in Nicaragua, Law of Reforms and Additions to Law 822, Law of Tax Concertation, which in its legal provisions reformed substantial aspects of Income Tax, both in the rates of the Definitive Minimum Payment (PMD) and in the monthly advances of this tax.\n\nIn addition, the withholding tax rates for certain labour, economic and capital income and capital gains and losses were modified.\n\nIn addition, on March 15, 2019, Presidential Decree 08-2019 was published, which regulates this law.\n\nBelow is a comparison of the main changes in income tax:\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
BEFORE<\/strong><\/span><\/td>\nREFORM<\/strong><\/span><\/td>\n<\/tr>\n
Art. 13. Definition of income from economic activity (first paragraph)<\/strong><\/span><\/td>\nBroad definition to include any activity. Also included for financial institutions as this type of income are those of capital and capital gains and losses.<\/span><\/td>\n<\/tr>\n
Art. 24 withholdings<\/strong><\/span><\/td>\nIncrease %<\/strong><\/span><\/td>\n<\/tr>\n
Indemnification 10%<\/span><\/td>\nDiets 12.5%<\/span><\/td>\nNon-resident natural person 15%<\/span><\/td>\nIndemnification 15%<\/span><\/td>\nDiets 25%<\/span>\n\nDaily subsistence allowance for municipal authorities 12.50%<\/span><\/td>\nNon-resident natural person 20%<\/span><\/td>\n<\/tr>\n
Art. 32, numeral 5, exemption for cooperatives<\/strong><\/span><\/td>\nExempt roof is increased<\/span><\/td>\n<\/tr>\n
An exempt roof of C$40,000,000.00 was established<\/span><\/td>\nIR exempt ceiling increased to C$60,000,000.00<\/span><\/td>\n<\/tr>\n
Art. 33, numeral 2<\/strong><\/span><\/td>\nCondition exemption<\/span><\/td>\n<\/tr>\n
The habit of the operations is changed<\/span><\/td>\nYou always pay sales tax on remunerated sales<\/span><\/td>\n<\/tr>\n
Art. 34 Income exclusions<\/strong><\/span><\/td>\n<\/tr>\n
Rents and capital gains that do not represent 40% with regard to economic rents<\/span><\/td>\nThe 40% parameter is deleted. Only financial institutions will integrate income<\/span><\/td>\n<\/tr>\n
Art. 38 Integration of income<\/strong><\/span><\/td>\n<\/tr>\n
Capital gains and rents of more than 40% were integrated with regard to economic rents<\/span><\/td>\nAll taxpayers are excluded and only financial institutions integrate income<\/span><\/td>\n<\/tr>\n
Art. 39 numeral 15<\/strong><\/span><\/td>\n<\/tr>\n
Deduction of interest and other<\/span><\/td>\nThe interest deduction limitation is established and financial leasing is included in this limitation<\/span><\/td>\n<\/tr>\n
Art. 41 numeral 1, adjustment to deductibility<\/strong><\/span><\/td>\n<\/tr>\n
The income from economic activity was established with definitive withholding that does not give the right to deduction<\/span><\/td>\nIn addition to the income from economic activity on a proportional basis, that from income and capital gains is included as non-deductible. Unless they can be identified separately<\/span><\/td>\n<\/tr>\n
Art. 49 Withholding to tax havens<\/strong><\/span><\/td>\n<\/tr>\n
17% was established<\/span><\/td>\nIncreases to 30%<\/span><\/td>\n<\/tr>\n
Art. 53 numeral 3, aliquot economic activity non-residents<\/strong><\/span><\/td>\n<\/tr>\n
It was set at 15%<\/span><\/td>\nIncreases to 20%<\/span><\/td>\n<\/tr>\n
Art. 59, sub-paragraphs 1 and 3, exceptions to the minimum payment<\/strong><\/span><\/td>\n<\/tr>\n
1. Exception of 3 years in general<\/span>\n\n \n\n3. Ripening periods subject to authorisation by MHCP, MIFIC and MAGFOR<\/span><\/td>\n1. The 3-year derogation does not apply to consortia or small taxpayers who have changed regime<\/span>\n\n \n\n3. Ripening periods only decided by the MHCP<\/span><\/td>\n<\/tr>\n
Art. 61 Taxable base minimum payment and aliquot<\/strong><\/span><\/td>\n<\/tr>\n
1% of gross annual income<\/span><\/td>\n3% of annual gross income large taxpayers.<\/span>\n Of the 2% for the fishing sector in the Caribbean.2% of annual gross income main contributors 1% of the annual gross income of other taxpayers<\/span><\/td>\n<\/tr>\n
Art. 62 Determination of minimum payment<\/strong><\/span><\/td>\n<\/tr>\n
Calculation according to 1%<\/span><\/td>\nCalculation according to 1%, 2% and 3% aliquot<\/span><\/td>\n<\/tr>\n
Art. 63 Minimum payment integer forms<\/strong><\/span><\/td>\n<\/tr>\n
Advances of 1%, the balance in favor is established, the margin of sale or commercialization is recognized for this payment and the advance of great contributor with ISC and financial entities anticipate under profits of 30% or 1%<\/span><\/td>\nAdvances of 1%, 2% and 3%, the balance in favor is eliminated, the sales or commercialization margin is maintained as long as the supplier anticipates its gross income and the advance of a large taxpayer with ISC and IECC and financial entities anticipate profits of 30% or 3%<\/span>\n\n \n\nCooperatives with incomes greater than C$60 MM will anticipate 1% over income or over margin with DGI authorization<\/span><\/td>\n<\/tr>\n
Art. 65 second paragraph. Credits and balance payable<\/strong><\/span><\/td>\n<\/tr>\n
Definitive withholding are not creditable except for those of income and capital gains when these are integrated<\/span><\/td>\nDefinitive withholding are not creditable, except for the income and capital gains of financial entities<\/span><\/td>\n<\/tr>\n
Art. 69, numeral 1. Obligation to pay<\/strong><\/span><\/td>\n<\/tr>\n
3 months after the fiscal year<\/span><\/td>\n2 months after the fiscal year<\/span><\/td>\n<\/tr>\n
Art. 80 Taxable base real estate income<\/strong><\/span><\/td>\n<\/tr>\n
30% deductible tax base<\/span><\/td>\n20% deductible \u00a0tax base<\/span><\/td>\n<\/tr>\n
Art. 81 Taxable income movable income<\/strong><\/span><\/td>\n<\/tr>\n
50% deductible tax base<\/span><\/td>\n30% deductible tax base<\/span><\/td>\n<\/tr>\n
Art. 87 Tax rate – income and capital gains<\/strong><\/span><\/td>\n<\/tr>\n
5% to trusts<\/span>\n\n10% residents rents and capital gains<\/span>\n\n10% non-resident capital gains and interest<\/span>\n\n15% non-resident capital rents<\/span>\n\n17% to tax havens<\/span>\n\n \n\nProperty subject to public register-rents\u00a0 and capital gains<\/span>\n\n0.01\u00a0 \u2013 50,000 1%<\/span>\n\n50,000.01 \u2013 100,000 2%<\/span>\n\n100,000.01 \u2013 200,000 3%<\/span>\n\n200,000.01 up to 4%.<\/span>\n\n\u00a0<\/strong><\/span><\/td>\n \n\n \n\n10% to interest of foreign financial institutions<\/span>\n\n15% resident and non-resident income and capital gains, including trusts<\/span>\n\n30% to tax havens<\/span>\n\n \n\n \n\nGoods subject to public registration – definitive withholding on income and capital gains<\/span>\n\n0.01\u2013 50,000 1%<\/span>\n\n50,000.01 \u2013 100,000 2%<\/span>\n\n100,000.01 \u2013 200,000 3%<\/span>\n\n200,000.01 \u2013 300,000 4%<\/span>\n\n300,000.01 \u2013 400,000 5%<\/span>\n\n400,000.01 \u2013 500,000 6%<\/span>\n\n500,000.01 up to 7%<\/span><\/td>\n<\/tr>\n
Art. 89 (second paragraph) final retention<\/strong><\/span><\/td>\n<\/tr>\n
Definitive withholding for income integration become the account of the IR<\/span><\/td>\nDefinitive withholding from financial institutions are considered on account of IR<\/span><\/td>\n<\/tr>\n
Art. 92 Payment and declaration – income and capital gains<\/strong><\/span><\/td>\n<\/tr>\n
Self-assessment within 30 days after the entire withholding of income and capital gains from assets subject to registration that did not withhold<\/span><\/td>\nSelf-assessment in 5 days after the month in which no withholding was made for income and capital gains<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\"\"Melvin A. Estrada Canizales<\/a>\nPartner\nGarc\u00eda & Bod\u00e1n\nNicaragua","protected":false},"excerpt":{"rendered":"

On February 28th, 2019, Law 987 was enacted in Nicaragua, Law of Reforms and Additions to Law 822, Law of Tax Concertation, which in its legal provisions reformed substantial aspects of Income Tax.<\/p>\n","protected":false},"author":10,"featured_media":9486,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[82],"tags":[],"class_list":["post-9485","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"acf":[],"_links":{"self":[{"href":"https:\/\/garciabodan.com\/en\/wp-json\/wp\/v2\/posts\/9485","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/garciabodan.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/garciabodan.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/garciabodan.com\/en\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/garciabodan.com\/en\/wp-json\/wp\/v2\/comments?post=9485"}],"version-history":[{"count":1,"href":"https:\/\/garciabodan.com\/en\/wp-json\/wp\/v2\/posts\/9485\/revisions"}],"predecessor-version":[{"id":39817,"href":"https:\/\/garciabodan.com\/en\/wp-json\/wp\/v2\/posts\/9485\/revisions\/39817"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/garciabodan.com\/en\/wp-json\/wp\/v2\/media\/9486"}],"wp:attachment":[{"href":"https:\/\/garciabodan.com\/en\/wp-json\/wp\/v2\/media?parent=9485"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/garciabodan.com\/en\/wp-json\/wp\/v2\/categories?post=9485"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/garciabodan.com\/en\/wp-json\/wp\/v2\/tags?post=9485"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}