Rates for the Different Taxes in Nicaragua
Nicaragua does not tax foreign-earned income. If setting up tax residence in Nicaragua, you should note that Nicaragua has an inheritance tax of 1% to 4% of a property’s registered value.
The corporate tax rate in Nicaragua is 30% or 1% on income over 40 million cordobas (US$1.48 million) for small- to mediumsized businesses. ProNicaragua is one tax incentive program for investors. Under it, you can set up your own free trade zone and enjoy a 10-year tax exemption. Industries targeted by the program include tourism, food processing, outsourcing services, footwear manufacturing, auto-part manufacturing, and forestry.
Other tax rates in Nicaragua include:
Sales Tax in Nicaragua
Most goods and services sold in Nicaragua are taxed at a rate of 15%. While this is significant and should be planned for, it’s typically more than made up for by the cheaper prices.
Income Tax in Nicaragua
Whether you’re a resident of Nicaragua or not, if you earn income there, you will be required to pay income tax there. Personal income tax rates for non-residents are a flat 15% on all taxable Nicaragua earned income.
Residents will pay a graduated percentage of tax on all Nicaraguan sourced income, capped at 25%. Both marriage partners are required to report and file separately. The fiscal tax year runs from July 1st to June 30th.
Property Taxes in Nicaragua
Typically, property taxes in Nicaragua run 1%. So a purchase of a home at a price of US$100,000 would have an associated annual property tax of $1,000.
Rental Income Tax in Nicagua
Rental income in Nicaragua is treated as regular income, so non-residents will pay 15% and residents will pay a maximum of 25%.
Deductions to the rental income may apply thereby so the tax rates indicated are based off of taxable rental income only, and not necessarily the full rental income amount.
Capital Gains Tax in Nicaragua
Capital gains are treated as regular income in Nicaragua, thus the taxable portion is taxed at the same rate.