In accordance with Art 82 of Law No. 562 “Tax Code of the Republic of Nicaragua” (CTr) and its reforms, in any procedure before the Tax Administration, the taxpayer may act personally or through a legal representative duly accredited with sufficient power of attorney.
In this sense, Art 103 determines that it shall be the obligation of all taxpayers to register in the Single Taxpayers Register of the Tax Administration, and to provide the data required in accordance with the law, and to keep them updated in due time and form. These data include:
- Legal domicile.
- Shareholder composition.
- Board of directors.
- Economic activity.
- Details of the current legal representative.
The above implies that all taxpayers must have their legal representative duly registered in the Single Taxpayers Registry (RUC) of the General Directorate of Revenue (DGI), as well as update said registry in case there is a change or renewal of the legal representation. For this purpose, it is important to take into consideration the following elements:
- The legal representative must have at least a general power of attorney for administration in force and must be duly registered in the Public Registry of Companies.
- The legal representative must be duly registered as the company’s representative with the Public Register of Companies.
- He/she must be Nicaraguan or have a valid residency card while exercising the legal representation of the company in Nicaragua.
- In case of a change of legal representative, the Tax Administration requests the revocation of the power of attorney of the currently registered representative.
It is important to note that some Revenue Administrations of the DGI require that the general power of administration granted in favor of the legal representative has been authorized by the current shareholder composition (by means of a general shareholders’ meeting) and registered with the Tax Administration, so that if the current shareholder composition differs from the one registered with the DGI, the registration or updating of the legal representative is suspended until the corresponding information is updated.
In view of the above, it is clearly important that all companies comply with their obligation to update their taxpayer information at least every two years or whenever there is a significant change.
In addition, Article 82 also refers to those special attorneys-in-fact authorized to carry out specific procedures before the tax authority, for which they must have a special power of attorney granted by the extraordinary general shareholders’ meeting or the legal representative – if they have sufficient powers – and authorized before a Notary Public.
In this regard, it is of utmost importance that the legal representative of the company has a general power of administration with sufficient powers to grant powers of attorney in favor of third parties on behalf of the company or that he/she has the powers of a general attorney-in-fact. Otherwise, the company may find itself in a situation in which it does not have any person within the national territory with sufficient powers to carry out formalities, appear at hearings or file administrative and/or judicial appeals, etc., especially when the legal representative is outside the country.
In this last case, the company must resort to the granting of power of attorney through other more complex legal channels, which must be analyzed on a case-by-case basis. For the aforementioned reasons, it is essential to have comprehensive corporate advice that allows the company to foresee these situations and ensure that it always has the necessary resources to comply with any requirement or take action before the Tax Administration, and it is essential to appropriately regulate the powers of the representative to ensure the possibility of granting special or general powers in the event that they are required for any specific circumstance before the Tax Administration.