News Share

The Tax Hub

Daily Tax Newsletter

Nicaragua

Responsive image

Nicaragua 2019 Tax Reform Measures

Nicaragua published its tax reform law (Law No. 987) in the Official Gazette on 28 February 2019 with subsequent notices and decrees issued for the implementation of certain aspects of the reform. Some of the main changes include:

  • Changes in the alternative minimum tax (AMT) for companies from a set 1% tax for all companies to the following rates on monthly gross income:
    • 3% for large taxpayers (2% if engaged in qualifying fishing activities on the Caribbean coast of Nicaragua)
    • 2% for principal taxpayers (principales contribuyentes); and
    • 1% for other taxpayers;
  • The introduction of an anti-avoidance rule in relation to the increased AMT rates to provide that if a company splits its operation in order to apply a lower AMT rate, the tax authority may treat the operations as not split for the purpose of AMT;
  • The amendment of applicable withholding tax rates, which are specified in a notice issued 1 March 2019, including the following final withholding taxes for payments to non-residents:
    • Reinsurance income - 1.5%
    • Insurance and guarantee income - 3%
    • International transport income - 3%
    • Lease and sublease income (immovable and movable property) - 15%
    • Dividends and other profit distributions - 15%
    • Interests, commissions, discounts, and similar - 15%
    • Royalties for the use of patents, trademarks, and other intangible rights - 15%
    • Capital gains, including from alienation of shares or other participation rights - 15%
    • Other capital income - 15%
    • Other income - 20%
    • Any income derived by non-residents established in tax havens - 30%
  • The introduction of the following withholding tax rates on income of non-resident individuals:
    • 20% on employment income (up from 15%);
    • 25% on director's fees (up from 15%);
    • 20% on other income; and
    • 30% on income paid to an individual resident in a tax haven;
  • The introduction of a 15% withholding tax on severance payments and other labor-related indemnities received by employees, including both residents and non-residents; and
  • The amendment of applicable fixed stamp duty rates, which are specified in a notice issued 1 March 2019.

Certain aspects of the reform law are regulated through Decree No. 08-2019, which was published 15 March 2019. Some additional aspects include:

  • Withholding agents must declare and pay tax withheld each month by the 5th calendar day of the following month;
  • Monthly advance tax must be declared by the 5th calendar day of the following month and paid by the 15th day;
  • VAT returns must be submitted by the 5th calendar day of the following month following each period, with large taxpayers and principal taxpayers also required to pay VAT by the 5th day and other taxpayers required to pay VAT by the 15th day of the following month;
  • The tax base for withholding on immovable property capital income is determined by deducting 20% for presumed costs and expenses without any other deduction allowed (i.e., net taxable amount of 80%);
  • The tax base for withholding on movable property capital income is determined by deducting 30% for presumed costs and expenses without any other deduction allowed (i.e., net taxable amount of 70%); and
  • The tax base for withholding on intangible property capital income is 100% of the gross income.

Law No. 987 and Decree No. 08-2019 entered into force on the date of publication. Rate changes generally apply from 1 March 2019.

Powerful Tax Tools

NEW

FX Rates

Global FX Rates including Tax Year Average FX Rates and Spot Rates for all Reporting Currencies.

NEW

Corporate Tax Rates

Corporate tax rates, surtaxes, and effective tax rates for the current year, as well as historical rates and approved future rates.

NEW

Country Analysis

Detailed tax guidance for companies doing business in over 100 countries, including summaries and snapshots of key tax facts and issues.

NEW

Cross Border Tax Calculator

Calculate total tax costs and benefits of a cross border transaction including withholding tax, participation exemption and foreign tax credit rules.

NEW

Cross Border Tax Rates

Provides Domestic, treaty and EU cross border tax rates for over 5,000 country combinations for 9 different payment streams.

NEW

OECD BEPS Project

Complete overview of the OECD BEPS Project, including daily BEPS news, country adoption of BEPS measures, and an overview of the 15 BEPS Actions.

NEW

Tax Calendar

Customizable calendar tool that tracks corporate income tax, value added tax and transfer pricing obligations by country or entity.

NEW

Tax Forms

English translations of key tax forms for over 80 countries, including tax return forms, treaty benefit forms, withholding tax forms, and more.

NEW

Worldwide Tax Treaties

Repository including thousands of tax treaties (in English), OECD, UN and US Models, relevant EU Directives, Technical Explanations, and more.

NEW

Worldwide Tax Planner

Calculates the worldwide tax cost of what-if scenarios based on legal entity structure, taxable income, and cross border transactions.

NEW

Certified Rates Report

Customizable Certified Rates Report providing updated corporate and withholding tax rates at the end of each month for over 100 countries.

NEW

Withholding Tax Minimizer

Enables quick calculation of tax costs and benefits of cross border transactions considering all possible transaction combinations and optimal routes.

NEW

VAT Rates

Provides value added tax (VAT) rates, goods and services tax (GST) rates and other indirect tax rates for over 100 countries.

NEW

NOL Calculator

Country specific calculator to determine how net operating losses can be utilized in carryback and carryforward years.

NEW

Transfer Pricing Calculator

Calculates TP ratios under various TP methods and calculates the difference between target ratios and actual ratios.

NEW

Individual Income Tax Rates

Individual tax rates for over 100 countries.

Play of the Day

Compare Forms

English translations of key tax forms for over 80 countries, including tax return forms, treaty benefit forms, withholding tax forms, and more.

We’re here to help

We’re here to answer any questions you have about the Orbitax products and services.

Send us a message

Who’s behind Orbitax?

We’re committed to providing high value, low cost tax research and management solutions.

Learn More