New Nicaraguan tax law

Non-residents who receive income from a source in Nicaragua, as well several types of property owners, will pay more as a result changes in the country’s tax law.

At the same time, new rules governing income tax favor individual taxpayers.

The new law - Ley de Concertación Tributaria - which came into force on January 1, increases to 15% the withholding charged to non-residents, on income earned in Nicaragua The previous rate was 10.5%.

With respect to capital gains, the rate payable on profits from the rent of real property, increased to 4%, compared to the 3% previously charged.

Profits from other kinds of rentals, which are likewise considered capital gains, are now taxed at a rate of 7%, compared with the previous rate of 1%, except where the revenue is earned in the ordinary course of business.

In this case, the taxpayer pays income tax, whose structure has changed slightly.

While the top rate of tax on income in the case of individuals remains at 30%, the taxpayer can now take advantage of a credit of 100,000 cordobas (about $4,000 at current exchange rates).

The previous maximum credit was 75,000 cordobas.

In addition, an employee who is fired or retires, can receive tax-free a payment of up to 500,000 cordobas.

For more information, please contact Samantha Aguilar at [email protected], or (505) 2254-5454