The draft law on Tax Coalition will extend exemptions until March 2015 and maintain tax free income for international cooperation given to nonprofit organizations.
Some of the goods included in the list of exemptions are books, magazines, school supplies, medicines, vaccines, agricultural goods, rice (except packaged rice or packages equal to or less than fifty pounds and higher quality presentation than 80/20), sugar cane (except for special sugars), vegetable cooking oil, corn, and coffee grounds, among others.
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).
The amendment to the Law on Tax Coalition sent by the Executive to the Assembly repeals the exemption from VAT on domestic production of clothing and footwear.
If the reform is approved, SMEs in these sectors will be the most affected "... as it states that they must pay Value Added Tax (VAT) and also orders that they withhold income tax, through an unclear mechanism within the fixed quota system. "
Employers indicate that for some companies, the inadequate implementation of an administrative ruling of the Department of Revenue increases costs by 15%.
"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. "
Machinery, farm equipment, tires and agricultural inputs are exempted from value added tax, according to the recent Tax Coalition Act.
The Law called ‘Concertación Tributaria’ (LCT), recently approved in Nicaragua maintains exemptions and exonerations for the agricultural sector, and simplifies procedures ensuring access to all producers.
An erratum clarifying that VAT will not be collected on Central American products has been published in the official newspaper La Gaceta in Nicaragua.
Elnuevodiario.com, reports that "Today there will be a publication in the official newspaper La Gaceta of the Taxes Regulation Act which was approved last December by the National Assembly said the economist Rene Vallecillo yesterday."
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.
A Nicaraguan business leader announced that its government will maintain equal tax treatment for products imported from countries in the region.
The affected Central American employers expect the Nicaraguan government to sign the rectifying documents as soon as possible so that the Directorate General of Customs can stop collecting the tax from today.
The elimination of the 15% Value Added Tax (VAT) on domestic production of industrial goods will directly affect exporters in Honduras.
From 1st January, the relief has been applied in Nicaragua on the 15% Value Added Tax (VAT) on domestic production of toothpaste, toilet paper, bath soap, washing detergents, matches, and sanitary napkins.
Nicaraguan agriculture businesses are warning the Government that abolishing tax benefits would increase costs in the sector and raise food prices.
In Nicaragua, imports of all raw materials and agricultural inputs for agricultural use are exempt from the 15 percent Value Added Tax (VAT). The government has announced plans to eliminate them.
The Nicaraguan dairy industry is calling on lawmakers to exempt cheese processing plants from paying the Selective Consumption Tax (ISC) and VAT on raw materials.
The industrial processing of cheese should be exempted from payment of ISC and VAT, so say the Chamber of Industry of Nicaragua (Cadin), which has asked the National Assembly to extend the tax breaks suggested by the Executive.
Deloitte Panama published a complete tax guide comparing the most relevant fiscal matters between Ibero-American nations.
The document includes the following topics:
0. Comparative Summary
1. Tax on company profits
2. Tax on income from employment, economic activities, capital assets, real estate, and capital gains of individuals.
3. Income Tax for Non-Residents
2010 will be a difficult year for the region's Treasuries, and tax reforms will be one of the weapons used by governments to fight this crisis.
Nicaragua has recently passed a highly controversial fiscal reform. Panama approved tax hikes for companies in the Colón Free Zone, as well as tobacco, casinos and insurance companies.
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