If cutting down or quitting drinking and smoking don’t feature on your list of “News Year’s Resolutions”, then the Minister of Finance and Public Credit has given you a good reason to add them. As of January 1st 2023, there will be a tax increase on the quota for alcoholic beverages, wines and beers, as well as cigarettes and tobacco derivatives. The increase is in the Selective Consumption Tax applicable to these products (See Below).
These tax increases will be applied at the product source/wholesale/import stage and is on the absolute alcohol in the product. How the new quotas will affect the retail prices in the new year remains to be seen.
Alcohol
This tax on each liter of alcohol will increase in 2023 by 6.00 Córdobas per liter to 60.00 Córdobas.
The increase in Alcohol tax was published by the Ministry of Finance and Public Credit in the Ministerial Agreement No. 017-2022.
Tobacco
Meanwhile, the quota increase on cigarettes and tobacco derivatives under Ministerial agreement 018-2022 is, are as follows;
On one thousand (1,000) cigarettes, the tax quota will increase by 392 Córdobas to 3,842 Córdobas.
On each kilogram of “cigars, cigarillos and chopped tobacco” the tax quota will increase by 262 Córdobas to 2,562 Córdobas in 2023.
Authority
The increase in the tax quota for Alcohol comes from the Law of Amendments and Additions to Law No. 822, Law of Tax Concertation LAW N°. 987, approved on February 27, 2019 and Published in La Gaceta, The Official Gazette No. 41 of February 28, 2019.
Article 151 of the amended law created a “base tax rate” for alcohol products which gave the Selective Consumption Tax (Impuesto Selectivo de Consumo or ISC) a starting point after which annual increases could be applied. Increases would take into account the “official exchange rate of the Córdoba to the US Dollar as well as inflation using the figures contained in the Central Bank of Nicaragua’s “Consumer Price Index (CPI)”.
In relation to tobacco, Articles 187, 188, 189 and 190 of the same law (822) addresses the “Specific Tax on the Consumption of Cigarettes and Other Tobacco Products (Impuesto Específico al Consumo de Cigarrillos y Otros Productos de Tabaco – or IECT), which applies to those individuals and businesses in the importation, production, manufacture, distribution etc., of cigarettes, cigars, cigarillos and tobacco.
See Official La Gaceta entry here: La Gaceta – No. 241 Friday, December 23, 2022, Page 15362
