Nicaragua Country Profile

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Tax Administration

Business Corruption

Companies should be prepared to make a number of payments to the tax authorities each year exceeding the average for the Latin American region. Paying value added taxes (VAT) and corporate income taxes are among the activities that require the most payments annually. The US Department of State 2011 reports that tax audits of foreign investors have increased in frequency and duration to the point where they may hinder normal business operations. Furthermore, the same report also notes that the government has occasionally used the tax authorities to pressure individuals and companies into accepting non-commercial terms in concessions or contracts. The same source reports that investors cite arbitrariness in taxation procedures, as well as a lack of delegation of decision-making authority.

According to Global Integrity 2011, tax laws are not always enforced uniformly or without discrimination in Nicaragua. Nevertheless, only a small amount of the surveyed companies expect to give gifts when meeting with tax inspectors, according to the data from the World Bank & IFC Enterprise Surveys 2010.

Political Corruption

According to Global Integrity 2008, the power-sharing agreement between the PLC and the FSLN is said to have deprived the National Office for Income of qualified staff, as appointments to this agency have been used to grant rewards to political supporters. It is further reported that taxation continues to be used as a political instrument to award loyalty or to punish opposition. Although less forcibly than by President Ortega's predecessors, tax inspections have also been used by the Ortega government to threaten NGOs and individuals critical of government policies or decisions. Global Integrity 2011 further notes that from 2008 to 2009, about 700 public servants were dismissed and subsequently replaced by friends of the new authorities or party loyalists. This, coupled with corruption, has seriously affected the level of professionalism in the tax collection agency.


The World Bank & IFC: Doing Business 2012:
- A medium-sized company must make an average of 42 payments to the tax authorities every year which take 207 hours to prepare, file and pay.

- The total tax rate is 48% of the profit.

The World Bank & IFC: Enterprise Surveys 2010:
- 4.2% of companies expect to give gifts in their meetings with tax inspectors.