Newsflash on Municipal Taxes in Nicaragua

1- Registration Tax

According to the Municipal Tax Plan and the Tax Plan of the Municipality of Managua, the obligation of the Registration Tax is established. This tax must be paid before January 31, in the municipality where the taxpayer has an establishment to develop each of the activities economically and which has been registered. A 2% tax rate is applied to the registration tax on the taxable base of the monthly average of the gross income obtained from the sale of goods or rendering of services for the months of October, November and December 2022.

2- Real Estate Tax

Pursuant to Executive Decree No. 3-95 of the Real Estate Tax, a 1% tax rate will be applied on the taxable base of 80% of the cadastral value of the properties already registered or that have been acquired as of December 31 of each taxable year.

Who are the taxpayers?

The owners, the owners and usufructuaries, the users or inhabitants, the possessor or holder by any title, the owner of the improvements or permanent crops or the owner of the land, the person who, having alienated by any title a real estate property, does not inform the respective Municipality so that it carries out the corresponding discharge.

How and when is IBI paid?

The IBI must be declared and filed during the months of January, February and March following the immediately preceding taxable year, using the forms to be provided by the Municipalities at the taxpayer’s expense. The taxpayer who owns several real estate properties in the same Municipality must file them in a single declaration.

The payment of the IBI shall be paid in equal installments of 50%, as follows:

a) First fifty percent (50%) during the months of January, February and March and;

b) Second installment of fifty percent (50%), no later than June 30, 2023.

It is important to take into consideration that taxpayers who pay the IBI in a single payment at the time of filing their return during the months of January, February and March, will receive a discount of ten percent (10%) of the tax payable.

3- Road Tax

According to Law 431 “Law for the Regime of Vehicular Circulation and Traffic Infractions”, a municipal road tax will be applied, which will have different denominations and values between C$50.00 and C$1,000.00 for each one of the vehicles registered in the name of natural or juridical persons.

The municipal road tax must be paid during the course of the first quarter of each calendar year, in cases of non-payment of the municipal tax within the term established by this Law, a fine of one hundred cordobas net (C$100.00) will be applied for infraction to the rules of admission to traffic.

Note that, the natural or juridical persons that having disposed of a vehicle in any title, must also deregister in the respective municipality of this municipal obligation.