Nicaragua taxes on a territorial basis: only Nicaragua-source income is taxed, for both individuals and companies. Nicaragua has no Controlled Foreign Company regime. Nicaragua operates a self-assessment system, with the Direccion General de Ingresos (DGI) conducting post-filing review.
The Nicaraguan tax year runs 1 July to 30 June by default, though a company may request a different fiscal year.
Nicaragua's headline corporate income tax (CIT) rate is 30%.
The headline personal income tax (PIT) rate is residents 30%; non-residents 20%.
The standard VAT/GST (or equivalent consumption tax) rate is 15%.
An individual is tax resident in Nicaragua if they stay in the country for more than 180 days in a calendar year (continuous or not), or if their main center of economic interests is in Nicaragua, unless they can prove tax residence or domicile elsewhere via a certificate from a foreign tax authority. A company is resident if registered under Nicaraguan law, has its fiscal domicile in Nicaragua, or has its place of management in Nicaragua. Nicaragua applies an extended territorial system under Law No. 822: only Nicaragua-source income, or income producing effects inside Nicaragua, is taxable, regardless of the taxpayer's residency status. Resident individuals and companies are taxed only on Nicaragua-source income at progressive rates up to 30% (companies: flat 30%, or a 1-3% minimum definitive payment on gross income if higher); non-resident individuals generally face a flat 20% definitive withholding tax on Nicaraguan-source income (per PwC), though certain income types carry their own item-specific rates instead (e.g., 15% on dividends and interest); non-resident companies likewise face item-specific withholding rates on dividends, interest, royalties, and service fees. Foreign-source income - overseas dividends, foreign rental income, remote work billed to foreign clients, and gains on foreign assets - falls outside Nicaragua's tax base entirely for residents and non-residents alike.
A non-Nicaraguan entity has a Nicaragua permanent establishment through a fixed place of business or a dependent agent habitually concluding contracts in Nicaragua on the entity's behalf, following the OECD Model Treaty definition as applied under Nicaraguan domestic law and any applicable tax treaty.
Nicaragua has no CFC regime - confirmed independently across three sources. As with other territorial systems in the region, foreign-source income is outside the tax base regardless of who controls the foreign entity earning it, removing the need for a CFC-style attribution mechanism. Nicaragua has no general anti-avoidance rule (GAAR). It has had transfer pricing rules aligned with OECD guidelines in effect since 2017, applying to related-party transactions, with a 30% withholding tax on payments to tax-haven jurisdictions serving as the primary anti-avoidance backstop.
Nicaragua has no thin capitalization provisions - confirmed independently across multiple sources. There is no statutory debt-to-equity ratio cap on interest deductibility for related-party or third-party debt.
Nicaragua does not use an elective check-the-box classification system; entity classification generally follows the entity's actual legal characteristics. Nicaragua does not have a comprehensive ATAD2-style anti-hybrid regime.
No foreign bank account or foreign financial asset reporting regime exists requiring residents to separately disclose foreign accounts; consistent with Nicaragua's territorial system, foreign-source income falls outside the Nicaragua tax base entirely and is not reported on the annual tax return at all.
Nicaragua's territorial system already excludes foreign-source income from the domestic tax base entirely, functioning as a broader substitute for a conventional participation exemption.
Nicaragua's territorial tax system limits the practical role of a foreign tax credit, since foreign-source income is generally outside the Nicaraguan tax base to begin with.
Sources conflict on whether Nicaragua has any comprehensive double tax treaty in force. Multiple higher-quality sources - a professional Worldwide Corporate Tax Guide, a Central America tax-system overview, and an investment-migration guide - state plainly that Nicaragua has not entered into any income tax treaty with any country. One lower-quality aggregator lists "1" treaty for Nicaragua without naming the partner or providing a citation. Given the specificity and consistency of the sources stating no treaties exist, treat Nicaragua as having no DTT network, and confirm directly with the Direccion General de Ingresos (DGI) or local counsel before relying on treaty relief for any Nicaragua-connected transaction.