TAX RATES > Nicaragua Tax Rates


Nicaragua Tax Rates

nicaragua personal Income Tax

Personal income tax rates for a resident individual in Nicaragua are progressive up to 30%. The tax rate is 20% for a nonresident individual deriving Nicaraguan-source income.

Basis - Residents generally are taxed on Nicaraguan-source income, such as earnings from investments in Nicaragua that exceed NIO 50,000, Nicaraguan-source employment and trading income. Nonresidents are taxed only on Nicaraguan-source income.

Residence - An individual that intends to reside indefinitely in Nicaragua is resident for tax purposes.

Tax Filing status - A married couple living together may elect a joint or separate assessment.

Taxable income - Income is taxed under a schedular system. Income derived from gainful employment, including benefits, is taxable. Individuals who carry on a trade or profession are generally taxed in the same manner as corporations. Investment income in the form of dividends is subject to tax at source according to a progressive rate schedule.

Capital gains - Capital gains are taxed according to a progressive rate schedule.

Tax Deductions and tax allowances - No personal allowances are granted.

Other taxes on individuals:

Stamp duty - Stamp duty is levied on certain types of documents issued in Nicaragua or abroad that produce effects in Nicaragua. The amount varies depending on the transaction.

Capital acquisitions tax - No
Capital duty - No

Real property tax - The municipal authorities levy a real property tax on the occupation of real property.

Inheritance/estate tax - No
Net wealth/net worth tax - No

Social security contributions - A company is required to contribute 16% of the gross salary of an employee to social security.

Administration and compliance:

Nicaragua Tax year - The standard tax year in Nicaragua is 1 July to 30 June.

Tax Filing and tax payment - Individuals with income in excess of NIO 50,000 must file an income tax return. A tax return need not be filed where the taxpayer's sole source of income is employment income and the employer has withheld tax.

Penalties - Penalties apply for late filing, failure to file or tax avoidance/evasion.


nicaragua Corporate Tax

Corporate tax rate in Nicaragua is 30%.

Residence - A corporation is resident if it is incorporated in Nicaragua, has its effective management in Nicaragua or has activities in Nicaragua and is owned mainly by Nicaraguan residents.

Basis - Residents and nonresidents are taxed only on Nicaraguan-source income. Branches are taxed in the same manner as subsidiaries.

Taxable income - Corporate tax is imposed on a corporation's profits, which consist of business/trading income, passive income and capital gains. Normal business expenses may be deducted in computing taxable income.

Taxation of dividends - Dividends are taxed at a rate of 10% upon distribution to shareholders (both legal entities and individuals).

Capital gains - Capital gains are treated as ordinary income.

Losses - Losses may be carried forward 3 years to offset profits. The carryback of losses is not permitted.

Alternative minimum tax - An Alternative Minimum Tax (AMT) is imposed at a rate of 1% on the value of a taxpayer's gross income.

Surtax - No
Foreign tax credit - No
Participation exemption - No
Holding company regime - No

Tax Incentives - Reduced tax rates are available to companies operating in the tourism and energy sectors.

Withholding tax:

Dividends - Dividends paid to residents and nonresidents are subject to a 10.5% withholding tax.
Interest - Interest paid to nonresidents and non-financial institutions is subject to a 22.5% withholding tax.
Royalties - A 21% withholding tax applies to patent royalties paid to a nonresident.

Branch remittance tax - No

Other taxes on corporations:

Payroll tax - Payroll tax must be withheld at progressive rates, ranging from 10% to 30%.

Real property tax - Municipalities levy a 1% tax on the value of real estate.

Social security contributions - A company is required to contribute 16% of the gross salary of an employee to social security.

Stamp duty - Stamp duty is levied on certain types of documents issued in Nicaragua or abroad that produce effects in Nicaragua. The amount varies depending on the transaction.

Transfer tax - No
Capital duty - No

Other - A special consumption tax is levied at a rate of 9%.

Anti-avoidance rules:

Transfer pricing - No
Thin capitalisation - No
Controlled foreign companies - No
Disclosure requirements - No

Administration and compliance:

Nicaragua Tax year - The standard tax year in Nicaragua is 1 July to 30 June. Alternatively, a taxpayer may request permission to adopt 1 of the following tax periods: April-March, October-September or January-December.

Consolidated returns - Consolidated tax returns are not permitted; each company must file a separate tax return.

Tax Filing requirements - The tax return must be filed within 3 months of a corporation's year end.

Penalties - Penalties apply for late filing of tax, failure to file tax or tax avoidance / tax evasion.

Rulings - A taxpayer may request a ruling on the tax consequences of a particular transaction affecting the applicant.


nicaragua vat (Value Added Tax) Rate

Rate of VAT in Nicaragua is 15%.

Taxable transactions - VAT is levied on the sale of goods and the provision of services.

VAT Registration - All traders carrying out activities in Nicaragua must be registered.

Filing and VAT payment - The VAT return must be filed in the month following the tax period, and any VAT due must be paid at that time. Taxpayers falling within the scope of the large taxpayer regime are subject to different rules.


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Last Update:  Nov 2010

(This page may show previous year's tax rates. Always check last update time)

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