Nicaragua: Protests Over Self Transfer of VAT

Employers indicate that for some companies, the inadequate implementation of an administrative ruling of the Department of Revenue increases costs by 15%.

Thursday, March 14, 2013

"Where the provision of services in general and the use or enjoyment of goods is provided by natural or legal persons or an entity, either resident or nonresident, which are not responsible for collecting VAT (IVA in Spanish), the payer of the service shall make a self transfer of the VAT incurred, which constitutes a tax credit under accreditation rules. "

Elnuevodiario.com.ni reports that "... the economist Rene Vallecillo explained that there has been a distortion in the implementation of the Law on Tax Coalition. 'The law states that the entity that should do the self transfer is the company that is registered as responsible for VAT collections, who is going to charge the VAT to themselves, who is also the entity that charges VAT on the provision of services or sale of goods .And what (the company) pays (in taxes) in one month is credited in the next, so there is a neutral effect. That's what the law says and the regulation ', but it is not being applied in this way. "

"... The view of the DGI consists in the fact that self transfer must also be done by those who sell exempt goods and services, "which they can not credit in the next month, turning the VAT into a cost or expense, increasing the total sales costs by a 15% .



More on this topic

Guatemala: Changes to VAT Refunds

November 2016

Changing how tax credits are returned is one of the proposals put forward in the reform of the rules for the VAT Act proposed by the tax authority.

Three years after the last modification to the regulations of the Law on Value Added Tax came into effect, it has been proposed that it be re-edited, in order to improve and streamline the audit processes.

Exporters to Deduct VAT on Purchases from VAT on Sales

July 2015

In El Salvador exporters will be allowed to deduct from the total to be paid for withholding tax for VAT, the amount that has been paid for the same concept for raw material purchases abroad.

From a statement issued by the Legislative Assembly of El Salvador:

During the plenary session on Thursday, approval was given, with 70 votes, to an amendment to article 76 of the Law on Tax on the Transfer of Movable Property and the Provision of Services (VAT), to achieve a more effective procedure in relation to the regulations for reimbursement or refund of tax credits to exporters without affecting the ability to exercise control that each State has.

Refund of VAT Charged on Imported Goods

January 2013

Nicaraguan companies affected by duties paid on imports of several products for family use may request a return of VAT already charged.

The president of the Superior Council of Private Enterprise (COSEP), Jose Adán Aguerri, stated that President Daniel Ortega will sign an erratum revoking the charges built in to the tax reform passed last year.

New Fiscal Rules Effective in Nicaragua

January 2013

On January first new rules came into force on taxation which reduce income tax, and others that aim to reduce tax evasion.

The government hopes that with this new reform it will increase productivity and competitiveness.

"The law brings new issues, such as a fiscal method for separating of incomes: into earned income, income from economic activity and income from equity.

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