Nicaragua: Taxes and Costs
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Rental income tax can be high in Nicaragua
INDIVIDUAL TAXATION
Nonresident individuals are liable to tax on Nicaraguan-sourced income. Married couples are required to file separate income tax returns.
INCOME TAX (Impuestro Sobre la Renta)
Income earned by non-resident individuals on Nicaraguan-sourced income is taxed at progressive rates. The taxable income is 70% of the gross income which is deemed to be the net income.
INCOME TAX |
|
| INCOME TAX | MARGINAL TAX RATE |
| Up to 50,000 (US$2,615) | nil |
| 50,001 - 100,000 (US$5,230) | 10% on band over US$2,615 |
| 100,001 - 200,000 (US$10,460) | 15% on band over US$5,230 |
| 200,001 - 300,000 (US$15,690) | 20% on band over US$10,460 |
| 300,001 - 500,000 (US$26,150) | 25% on band over US$15,690 |
| Over 500,000 (US$26,150) | 30% on all income over US$26,150 |
| Source: Global Property Guide | |
Rental Income
For rental income, 70% of the gross rent is taxable (consequently, only 30% of the gross rent can be deducted).
Capital Gains Tax
Capital gains earned through selling real estate properties in Nicaragua are taxed at the ordinary income tax rates.
PROPERTY TAX
IMMOVABLE PROPERTY TAX (Impuesto de Bienes Inmuebles or Predial)
The property tax is levied at a flat rate of 1%. The tax base is 80% of the cadastral value of the property (land, buildings and permanent improvements), as assessed by the municipal cadastral office. The tax is paid to the local government (alcaldias municipals).
However, property taxes are less important in Nicaragua than elsewhere, due to a failure to establish an up-to-date national cadastre. Reportedly, many smaller municipalities do not even collect the tax, as has been their responsibility since 1992, owing to lack of knowledge or technical capacity. Also, additional problems arise in many areas as a result of the insecurity and confusion of land titles, which makes it difficult to know who is supposed to pay the tax. Thus, paying local taxes in Nicaragua has been described as a voluntary act.
NET ASSETS TAX (Pago Mínimo Definitivo del Impuesto Sobre la Renta)
All individuals and entities engaged in business are required to make a minimum income tax payment at the annual rate of 1% on the monthly average of total assets.
Taxpayers are not liable for the net assets tax during the first three years of their business activity. Subsequently, no tax is payable when the average balance of assets is less than or equal to US$150,000.
The net assets tax is declared in the income tax return. The income tax to be remitted is either the net assets tax or the actual income tax liability, whichever is higher. If there is no income tax liability because of capital losses, the net assets tax is still payable.
Nicaragua - more data and information
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