The Government of the Republic of Nicaragua has announced there will be an exemption on IVA (15% Value Added Tax) for “sales of food, beverage and lodging” for the period of the country’s Bicentennial Independence holidays.
The program is being organized by the Ministry of Finance and Public Credit (MHCP), the Nicaraguan Institute of Tourism (INTUR) and the General Directorate of Income (DGI).
The temporary exemption on the collection of the 15% IVA tax will apply to sales between the 14th of September 2021 and the 17th of September 2021.
Tourism Promotion
The idea behind the exoneration is to promote tourism and involve more Nicaraguan families in the celebration of the patriotic events.
How do Businesses Register?
The DGI have already installed the “Fiesta Patria” icon on the Ventana24/7 online system. You will see it on the menu page that comes up after you enter your User Number and Password as usual.
Businesses already registered for IVA must confirm their participation and then access the options available to them.
What is IVA?
IVA or Impuesto al Valor Agregado (Value Added Tax) is a 15% tax on the consumption of certain goods or services. It is paid by the customer to the business providing those goods or services.
Only those businesses registered for IVA can charge the 15% tax. They are responsible for the accounting of the IVA collected, offsetting the IVA they pay on business related goods and services and forwarding the difference to the government.
Smaller businesses might be on the “Cuota Fija” system or Fixed Quota Tax which is a combined Business Tax and Value Added Tax for small taxpayers. These businesses pay a fixed monthly amount which cannot be charged to customers in all or in part.
Trivia: In Canada this tax is known as GST (a 5% Goods and Services Tax), however most provinces have other sales taxes on top of the GST that can increase the combined tax to 17%. In the UK, IVA is also known as a Value Added Tax and the maximum rate is 20%.
