A competitive system of company taxation
There are additional costs that all investors should consider in their investment plan, such as tax payments and basic services costs, which are detailed below.
The Tax Concertation Law 822 mainly aims to modernize and improve tax administration, simplify payment and regulate exemptions to reduce tax evasion and broaden the tax base.
Here is a list of the main taxes charged in the country:
- Income tax (IR): Nicaragua's income tax rate for income from economic activities is 30 percent.
- Value added tax (IVA): The Value Added Tax (IVA, by its Spanish acronym) is 15 percent of the value of a product or an activity. Article 111 of the Tax Concertation Law establishes a series of activities, which are exempt from the IVA.
- Selective consumption tax (ISC): Some products subject to ISC include alcoholic beverages, beer, cigars, cigarettes, sodas, and sparkling water.
- Stamp tax: This tax applies to certain documents listed in article 240 of the Tax Concertation Law when they are issued in Nicaragua, or when issued in foreign countries, but take effect in Nicaragua.
- Real estate tax (IBI): The Real Estate Tax is applied to properties located within the boundaries of each municipality. Land, stable or permanent plantations and the fixed and permanent constructions or installations on them as defined in articles 599 and 600 of the Civil Code, are considered real estate.
- Municipal tax on incomes (DAI): Customs duties on import taxes are contained in the Central American Import Tariff and apply to the CIF value of goods imported from outside Central America.
Other operating costs
In Nicaragua, the energy distribution service is provided by DISNORTE-DISSUR, and it is regulated by the Nicaraguan Energy Institute (INE). Industrial companies have the option to choose between power rates with or without time discrimination. For an industrial company with a monthly contracted load above 200 kw and under the category of without time discrimination, the cost per kwh would be US$0.19 approximately.
Additionally, a company whose minimum requirement is a concentrated load of one megawatt per month, can apply to the category of "Great Consumer", and get a special rate through direct purchase to energy generation enterprises.
Water service costs
The Nicaraguan Aqueduct and Sewer Enterprise (ENACAL) is the entity responsible for providing the water and sewer service in the country. This company is regulated and controlled by the Nicaraguan Institute of Aqueducts and Sewers (INAA). In Nicaragua, a company whose average monthly consumption is greater than 50 m³ of water will apply to an approximate fee of US$0.40 per m³. ENACAL also applies a fee for every m³ consumed to companies with private wells.
In Nicaragua, there are several telecommunication companies that offer E1 phone service, which is widely used by companies that handle a high level of calls in their operations.
Additionally, they offer plans of advanced digital lines that include services such as call waiting, three-way conferencing, caller ID, voice mail and text messages (SMS). In such schemes, the cost per minute for international calls to the U.S. and Canada is approximately US$0.20 / min.
The main suppliers of business connections in Nicaragua are Claro, Amnet, Navega, IBW, Ideay, among others. They offer various packages of dedicated enterprise data whose approximate average prices can range from US$70 for a connection of 256 Kbps up to US$640 by a connection of 3.072 Kbps. We highly recommend contacting the provider of your choice to quote the data package that best suits the needs and requirements of your business.