Taxes in Nicaragua

The legal framework is based mainly on the Código Tributario, Ley 562, and the Ley de Concertación Tributaria, Ley 822, as amended by later laws including Ley 891, Ley 987, Ley 1212 and Ley 1279. A new tax, rate, exemption, tax base or sanction requires a legal basis. The Ministerio de Hacienda y Crédito Público coordinates public finance, while the Dirección General de Ingresos, known as the DGI, administers domestic taxes, taxpayer registration, electronic services, audits and refunds. The Dirección General de Servicios Aduaneros, or DGA, administers customs duties and import taxes. Alcaldías and Concejos Municipales administer local charges. Administrative tax and customs appeals ultimately go to the Tribunal Aduanero y Tributario Administrativo after the applicable DGI review stages. The DGI issues the Registro Único del Contribuyente, or RUC, to people and companies carrying out economic activities. For an individual, the RUC is generally linked to the Cédula; a company RUC generally begins with J, while foreign individuals may receive an N, R or E designation. Registration also provides access to the Ventanilla Electrónica Tributaria, or VET. Depending on the activity, the taxpayer must issue compliant invoices, keep books and records, submit returns including zero returns where required, and preserve accounting documents for at least four years. Income tax, called IR, follows source and territorial rules. A natural person is generally treated as resident after more than 180 days of presence, while a legal entity is generally resident when incorporated in Nicaragua or when it has its fiscal domicile or management there. Income from Nicaraguan sources can include services used in Nicaragua, domestic activities, communications and certain export-related income under the Ley de Concertación Tributaria. Employment income is calculated over the calendar year from 1 January to 31 December. Annual net employment income up to C$100,000 is taxed at 0%. The brackets then apply 15% to the amount above C$100,000 up to C$200,000, 20% above C$200,000 up to C$350,000, 25% above C$350,000 up to C$500,000 and 30% above C$500,000, using the corresponding fixed amounts in the statutory table. Allowed deductions can include INSS contributions and qualifying savings or pension contributions. An employer normally withholds and pays the monthly amount. An employee with one employer generally does not file a personal annual return, but a return may be required with two or more employers, an incomplete year, deductions or a refund claim. Economic activity income is generally taxed on net income after permitted costs and expenses. Annual net income above C$12,000,000 is subject to 30%; lower amounts use a progressive table with rates from 10% to 30%. Qualifying losses may generally be carried forward for up to three following periods, but a loss from an exempt period is excluded from that treatment. The Pago Mínimo Definitivo, or PMD, is a minimum income-tax payment for covered economic activities. The standard rate is 1% of taxable gross revenue, 3% for large taxpayers, and 2% for fishing activities on the Caribbean Coast. Certain large taxpayers and specified financial or excise-tax collectors calculate the monthly advance as the higher of 30% of monthly profit or the applicable PMD percentage of monthly gross revenue. A new investment generally receives a PMD exemption for about 1.3 years, subject to the statutory conditions. Other exceptions can apply to regulated prices, a start-up or maturity period, inactivity, force majeure, the simplified regime, income-tax exemption or approved food-security activities. Natural persons with monthly sales of no more than C$100,000 and inventory of no more than C$500,000 may qualify for the Régimen Simplificado, also called Cuota Fija. The regime excludes, among others, legal entities, professionals, shopping centres and import or export businesses. It normally requires a fixed monthly payment by the 15th of the following month rather than a monthly income-tax return, together with simplified invoices, simplified income and expense records, and retention of supporting documents. A closure notice generally must be filed at least 30 days before the planned closure. Value-added tax, or IVA, is normally charged at 15% on sales, imports or internationalization, services and the use or enjoyment of goods or services. Exports of goods and services may qualify for a 0% rate when the statutory conditions are met. Taxable businesses generally use the debit-credit method, show IVA separately on the invoice and file and pay monthly by the 15th of the following month. An export or 0% balance may be carried forward or, where the legal requirements are met, compensated or refunded. Large collectors may have to pay an advance for transactions from the first through the fifteenth day of a month within five business days after that period. The selective consumption tax, or ISC, applies to specified goods and imports according to the applicable SAC schedule. Changes effective 9 April 2026 altered the tax base and rates for numerous food products, imports, alcoholic drinks and tobacco. Certain drinks and alcohol are assessed using the distributor price or a specific amount per litre of alcohol, and the law also changed related credit and cost rules. The fiscal stamp tax, or ITF, uses rates updated annually by the MHCP; the 2026 schedule was set through Administrative Agreement 008-2025. Fuel is also subject to the Impuesto Específico Conglobado a los Combustibles and the road-maintenance financing charge known as IEFOMAV. Withholding duties depend on the payment. Common income-tax withholding rates include 2% for general goods and services, 10% for services by a resident professional or higher technical specialist, 3% for agricultural goods, 1% for card transactions, 2% for construction and 2% for rent. Special rates apply to other transactions under the DGI catalogue. Definitive withholding on specified payments, including DMI where applicable, is generally due by the fifth business day of the following month. Capital income and capital gains are generally subject to a 15% rate for residents and non-residents, with special rates for some foreign bank financing and payments to tax-haven jurisdictions. Transfers of real estate or registered property use progressive rates from 1% to 7% according to the US-dollar-equivalent value bands. The tax base is generally reduced by 20% for real-estate capital gains and by 30% for tangible movable property, while intangible property is generally assessed on its gross amount. Municipal charges depend on the municipality. In Managua, the Impuesto Municipal sobre Ingresos, or IMI, is generally 1% per month on gross revenue from sales, industry, professional services and other services, with exclusions including salaried employment and hospital services. The annual municipal registration charge, or Matrícula, is generally 2% of the average monthly gross revenue for the previous three months; a new business generally uses 1% of capital. Other municipalities apply Decreto 455 and their own local procedures. The Impuesto sobre Bienes Inmuebles, or IBI, is generally 1% of 80% of the cadastral or self-assessed value. The IBI declaration normally covers January through March of the following year, with 50% payable in that period and the balance by 30 June; paying the full amount in the first quarter can qualify for a 10% discount. Property located in several municipalities requires proportionate declarations and payments to each municipality. Customs duties include the Derecho Arancelario a la Importación, or DAI, import IVA, import ISC and other charges administered by the DGA. The amount depends on the SAC classification, customs value, origin and applicable trade rules. Export revenue generally does not bear a national income or local sales charge on the export itself, but matrícula charges and sector-specific rules still require review. Non-residents without a permanent establishment generally face definitive withholding at source. Common rates include 1.5% for reinsurance, 3% for insurance, guarantees, sea or air transport, international land transport and international telephone or internet communications, and 20% for other economic activities. Non-resident employment income is generally taxed at 20%, capital income usually at 15%, and payments to tax-haven jurisdictions at 30%. A permanent establishment normally requires a RUC, continuing filings and a resident representative. Related-party transactions are subject to arm's-length pricing rules, including a relevant related-party threshold of 40%. Do not assume treaty relief: a comprehensive current bilateral double-tax treaty with Nicaragua must be verified separately for each country and instrument. Monthly withholding payments are generally due by the fifth business day of the following month. IVA, ISC, income-tax advances and PMD are generally due by the 15th calendar day of the following month, as is Cuota Fija. The annual income-tax deadline requires particular care because Ley 987 refers to the last calendar day of the second month after the period ends, while an older DGI FAQ refers to 31 March. The current DGI calendar and the taxpayer's approved tax period should control the filing date. A special accounting period may last up to 12 months, but the application generally must be filed at least three months before it begins. The DGI may conduct an audit through accredited officials. Requested information is generally supplied once within 10 working days. After an audit has begun, a substitute return is generally blocked for the affected periods. An accepted credit balance may support compensation or a refund. The usual administrative sequence is Reposición, then Revisión before the DGI leadership, followed by Apelación to the Tribunal Aduanero y Tributario Administrativo; a Recurso de Hecho may be available in the circumstances defined by law. Payment plans can cover one to 24 months and may require security. Late payment of indirect taxes can generate a surcharge of 5% per month or about 0.17% per day. Direct-tax arrears can generate 2.5% per month or part of a month, together with maintenance-of-value adjustments. Late or incomplete formal duties may be penalized in Unidades de Multa, with one unit equal to C$25. A tax adjustment can carry a 25% sanction, and tax evasion can also create criminal liability. Social-security contributions are separate from taxes under the Código Tributario and should not be treated as tax payments.