Exemption from VAT and income tax for SMEs operating under the fixed quota regime will be retained in the Tax Act Coalition whose reform is being proposed by the Executive.
There are about 200,000 small and medium enterprises (SMEs) operating under the so-called fixed quota regime, contributing 40% to gross domestic product (GDP).
Bayardo Arce, advisor to the President for Economic Affairs, told Elnuevodiario.com.ni that "...
With the consent of the private sector, the government has announced that it will remove from the Tax Coalition Law the article which establishes an end to exemptions on December 31st this year.
The executive Power will this week present the law reform to the National Assembly, and it is expected that it will be approved before the end of the current legislative period.
The COSEP of Nicaragua and the government are reviewing issues such as future tax reforms and social security, the new agreement with the IMF and the adjustments to the electricity tariff.
The Superior Council of Private Enterprise (COSEP) recently met with the counselor for Economic Affairs of the Presidency, Bayardo Arce Castaño.
"The second half of this year will be marked by fiscal and social security reforms, reviews of the electricity tariff, and negotiations with the International Monetary Fund (IMF) over a new economic and financial program. At least that's what was set out during a meeting held by the Monitoring Committee composed of the Superior Council of Private Enterprise (COSEP) and the Government, represented by the Economic Advisor of the Presidency, Bayardo Arce Castano," reported said LaPrensa.com.ni.
A so called "tax pact" will be hurried by the Government, after pressure from the International Monetary Fund.
"We must discuss this, we must be aware of the fact that in 2010 this will impact economic performance, and this is why it is being analyzed by the Superior Council of the Private Enterprise", indicated Bayardo Arce, Presidential Adviser in economic matters, in an article in newspaper "La Prensa de Nicaragua".
The Government did not provide details on how it plans to modify the tax collection system, but made the commitment to the IMF that it will increase revenue from tax collection.
Tax law expert, Julio Francisco Báez, said that the reform will not only seek to increase collection, but to stimulate investment and eliminate anti-exporter biases. Bayardo Arce, Presidential Economic Advisor, spoke of removing tax exemptions from various sectors as they are considered to be "excessive."