In Nicaragua, there is uncertainty because the government is reviewing the tax reform without the participation of businessmen, and because adjustments to the minimum wage could be made in September.
Weeks ago, it was reported that when the government's review of the tax reform in force in the country since February is completed, businessmen consider that no tax cuts will be made, despite the fact that production costs in the country have risen considerably.
In the government's review of Nicaragua's tax reform that has been in place since February, businessmen consider that no tax cuts will be made, even though production costs in the country have risen considerably.
After the approval on February 27, 2019 of the amendment to the Tax Concertation Law, which consists of raising from 1% to 2% the income tax for medium sized companies with higher income, and for large taxpayers from 1% to 3%, the productive sector has reported increases in its production costs.
Businessmen in the industrial sector in Nicaragua say that since the tax reform was implemented in the first quarter of the year, employment has fallen between 30% and 35%.
On February 27, 2019 was approved the amendment to the Law of Tax Concertation, which consists of raising from 1% to 2% income tax for medium enterprises with higher income. Another of the measures contemplated by the reform is to raise the income tax of large taxpayers from 1% to 3%.
In Nicaragua, the business sector is preparing an appeal of unconstitutionality against the Tax Concertation Law, approved a few days ago by the National Assembly.
In the midst of Nicaragua's political and economic crisis, the National Assembly approved a tax reform that increases the income tax of large taxpayers from 1% to 3%.
On the morning of February 27th, the reform of the Tax Concentration Law was approved, which also contemplates raising from 1% to 2% the income tax for medium sized companies with higher incomes.
In Nicaragua, the government plans to increase employer, labor, and state Social Security contributions, and to approve a tax reform that would increase taxes for medium and large companies.
Although the country has been in a serious economic and political crisis since April 2018, when the government tried to implement reforms to the Nicaraguan Institute of Social Security (INSS), the Ortega administration is once again trying to make changes to the institution, this time through an administrative resolution.
Although the rules started to be applied on July 1, a regulation has not yet been defined and approved to regulate the way in which the declarations will be made.
The business sector is working on a proposal for a regulation to be agreed with the government, and once it is ready, companies can start making statements.
"..."We are working on the revision of the proposed regulation, we are in that situation at the moment, effectively it will come into force, but remember that it is not as if tomorrow companies have to go and make a presentation of the results related to this issue," said Aguerri.
Starting from June 30, the rules that oblige companies to report transfer prices are scheduled to come into effect.
At the beginning of last year,the date of entry into forceof Chapter V of the Tax Concertation Law was postponed, after the business sector stated that it was not prepared to start complying with the rule.
A complaint has been made that the General Directorate of Revenue owes at least $18 million in tax refunds to the private sector.
The slowness with which the tax authorities give refunds seems to be a widespread problem in the region. It is not only in El Salvador that entrepreneurs have to face this problem, but also in Nicaragua, where they say at least $18 million is owed to the private sector, explained Jose Adan Aguerri to Elnuevodiario.com.ni.
Through an agreement between the government, COSEP and operators, the fee for the installation of antennas charged to telecoms operators has been canceled.
An article on Elnuevodiario.com.ni reports that Jose Adan Aguerri, president of the Superior Council of Private Enterprise (COSEP) said on Twitter: "We have reached an agreement with Telcor to repeal Agreement 003-2015 and restore force to Agreement 010 -2012. "
An agreement has been made to postpone until May 25 the effectiveness of various lists of tax breaks for the purchase of raw materials in order to work on a single document and add new products.
At a meeting between representatives of the government and the private sector it was agreed to extend the validity of the lists for tax exemptions in order to negotiate within that period the inclusion of other products and the creation of a single document. It was also agreed to remove fines for importers starting from 1 April.
Producers are complaining about a lack of agility and excessive paperwork in the process to request tax exemptions for the purchase of equipment and farm machinery.
Agricultural producers argue that they can not easily access the exemptions for the purchase of equipment which is established in the recently passed Tax Act. Although it has been stated that within three months the necessary reforms will be made for the exemptions to given on products and not producers, the current requirements are delaying procedures and access to the incentive on the part of the producers.
With the reform to the law on Tax Concentration non-resident investors in the country will have to pay 15% instead of 10% on income earned from capital.
According to Juan Sebastian Chamorro, executive director of the Nicaraguan Foundation for Economic and Social Development, the new reform "... is a positive thing for the country because it will generate an increase in the collection of such taxes but is a negative blow to natural and legal non residents because the Revenue Department will no longer deduct 10% on capital transfers, but rather 15 %. "
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 amendment to the Law on Tax Coalition which the government is discussing would keep exemptions on the purchase of materials for the sector and contemplates changes to exemptions in the tourism sector.
With the proposed reform agricultural activities would continue to enjoy the exemption from selective consumption tax (ISC), value added tax (VAT) and the tariff on imports (DAI) for the purchase of machinery and other materials needed for the activity.