Tax laws Nicaragua
Nicaragua's tax system comprises various taxes, including personal and corporate income taxes, a value-added tax (VAT), and other levies. The taxation framework is primarily territorial, taxing income generated within Nicaraguan borders.
1. Personal Income Tax:
Residents:
- Subject to progressive tax rates on Nicaraguan-source income:
- Up to NIO 100,000: 0%
- NIO 100,001 to NIO 200,000: 15%
- NIO 200,001 to NIO 350,000: 15% plus 20% on excess over NIO 200,000
- NIO 350,001 to NIO 500,000: 45,000 plus 25% on excess over NIO 350,000
- Above NIO 500,000: 82,500 plus 30% on excess over NIO 500,000
- Capital gains are taxed at 15%.
Non-Residents:
- Flat 20% withholding tax on Nicaraguan-source income.
2. Corporate Income Tax:
- Taxation Basis: Nicaragua operates a territorial tax system, taxing only income sourced within the country.
- Tax Rates:
- Standard Rate: 30% of net taxable income.
- Alternative Minimum Tax: 1% to 3% of gross income, with the higher amount applied. citeturn0search1
3. Value-Added Tax (VAT):
- Standard Rate: 15% on most goods and services.
4. Other Taxes and Considerations:
- Withholding Taxes: Rates vary depending on the payment type and recipient's residency status.
- Property Tax: Applicable to real estate holdings, with rates depending on location and value.
- Excise Taxes: Levied on specific goods like alcohol, tobacco, and gasoline.
- Customs Duties: Applied to imports, with rates varying based on goods and trade agreements.
Recent Developments:
- Special Development Regimes: The Nicaraguan government has established "special development regimes," dividing the country into zones with distinct legislative frameworks. These zones aim to attract foreign investment, particularly from China, in sectors like mining and infrastructure. Critics express concerns about potential impacts on national sovereignty and local resources.
Tax Compliance:
- Filing Requirements: Individuals earning above NIO 100,000 annually must file income tax returns. Employers handle tax withholdings for employees earning below this threshold.
- Tax Year: Aligns with the calendar year, from January 1 to December 31.
Note: Tax laws and regulations are subject to change. It's advisable to consult local tax professionals or authorities for the most current information and personalized guidance.
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