Nicaragua is an attractive destination for international companies in manufacturing, services, and especially agriculture. Therefore, if you are interested in entering the local market, you must understand the complex ecosystem of tax compliance to avoid sanctions, fines, and the potential closure of operations or the inability to carry out commercial activities.

Firstly, entities involved in the sale of goods, industry, or services must register in Managua during December and January. However, registration is only available in January for the rest of the municipalities. Non-compliance can result in a fine of around 5% to 10% of the non-reported amount.

Regarding taxes, the main tax is Income Tax, which is paid to the General Directorate of Revenues.

There are two ways to apply it:

1. Based on 30% of Net Income.
2. As a percentage of the Final Minimum Payment (1%, 2%, or 3%) on Gross Taxable Income.

The higher amount will be applied. The second most important tax is the Value Added Tax (VAT), which has a standard rate of 15%. It is significant because it is paid monthly and applies to companies providing services and selling goods, although there are certain exceptions: school materials, unprocessed agricultural goods, and hygiene products.

Finally, local corporations must update their information about the Final Beneficiary to maintain an accurate record of the final beneficiaries of the corporate structure. Changes must be reported within 60 days for international companies.

If you manage operations in Nicaragua or plan to expand to Nicaragua or any of the more than 50 countries where Auxadi offers accounting, tax, and payroll services, contact us. With 45 years of experience and 1,500 satisfied clients, we can make your life easier. Contact us.

Auxadi can become your ideal partner. We offer a one stop shop value added outsourcing services in the areas of accounting and reporting, tax compliance, payroll management and representation services, among others.