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- Basic Facts
- Statutory Labor Requirements
- Employee Income Tax In Brazil
- Employee Social Security In Brazil
- Deductible Expenses In Brazil
- Immigration In Brazil
- Value Added Tax (VAT) In Brazil
- Withholding Tax In Brazil
- Terminating Employee In Brazil
- Statutory Employee Benefits In Brazil
- Payroll In Brazil
- Ease Of Doing Business In Brazil
- Business Opportunities In Brazil Section
- Why Use Global Expansion To Hire Your Employees In Brazil
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BASIC COUNTRY FACTS
Republic of Nicaragua
Managua
- Spanish
- English
6.466 million
Nicaraguan córdoba
.ni
+505
Nicaraguan córdoba
STATUTORY LABOR REQUIREMENTS
Probation Period
- Trial period cannot exceed 30 days
Annual Leave
- Employees are generally entitled to 15 calendar days of paid leave every six months.
- Such leave should be taken all at once, but alternate arrangements may be made.
Public Holidays
- New Year's Day (1st January)
- Maundy Thursday (9th April)
- Good Friday (10th April)
- Labor Day (1st May)
- Mother's Day (30th May)
- Sandinista Revolution Anniversary (20th July)
- San Jacinto Day (14th September)
- Independence Day of Nicaragua (15th September)
- All Souls Day
- Feast of the Immaculate Conception (8th December)
- Christmas Day (25th December)
Maternity Leave
- Female employees are generally entitled to four weeks of maternity leave before the birth and eight weeks after.
- The Social Security Institute pays 60% of her salary and the employer pays the remaining 40%.
Paternity Leave
- There is no statutory paternity leave
Sick Leave
- If the employee has a non-work related illness or injury, s/he is generally entitled to 26 weeks of leave, but this is often increased to one year.
- The first three days are unpaid, unless the company has established a practice of paying for those days.
Work Hours
- The work week should not exceed 48 hours or eight hours per day.
Overtime
- Overtime hours may not exceed nine per week and are compensated at a rate of 200% of the standard wage.
Notice Period
- Employees must provide 15 days’ notice
Severance
- In general, the employee is entitled to pay as follows:
-
- up to three years of service: one month’s salary for each year or fraction of a year
- four to six years: 20 days’ salary for each year
- 7+ years: five months of salary
13th Month Salary in Brazil
- Yes (Mandatory)
- There is a statutory requirement to pay the 13th month salary 'Aguinaldo'.
- This is an extra month salary that must be paid in the first 10 days on December.
INCOME TAX
- Nicaragua taxes its citizens and all residents and non-residents on their income originating in Nicaragua.
- Taxable income that originates in Nicaragua obtained by non-residents or non-domiciled persons is determined as a percentage of gross income, depending on the nature of the income.
- Income derived from self-employment or from trade or business activities is taxable.
- Resident individuals are subject to progressive tax rates ranging from 10% to 30% of net self-employment and business income.
- Nonresident individuals are subject to a flat 20% withholding tax on this income.
- Residents are subject to income tax according to the progressive tax rates shown below:
|
Taxable income (NIO) |
Minimum tax charge (NIO) |
Tax on excess (%) |
|
|
Over |
Not Over |
||
|
0 |
100,000 |
0 |
0 |
|
100,000 |
200,000 |
0 |
15 |
|
200,000 |
350,000 |
15,000 |
20 |
|
350,000 |
500,000 |
45,000 |
25 |
|
500,000 |
And above |
82,500 |
30 |
DEDUCTIBLE EXPENSES
Employment Deductions
- An employee's social security contribution (7.00%) is considered as a deductible expense for income tax purposes.
- The contributions from employees to saving funds and/or pensions, other than social security, are deductible, provided that these funds have the endorsement of the corresponding authority.
Personal Deductions
- 25% of education, health, and professional services are deductible up to a maximum amount of NIO 20,000.
Business Deductions
- Personal business-related expenses are deductible if properly documented and accounted for and if accepted by the fiscal authorities as proportional to income originated by the business activities.
- Total business expenses can be determined ex officio by the fiscal authorities as a percentage of gross income.
|
Deductible Expenses |
|
|
Employment Deductions |
|
|
Personal Deductions |
|
|
Business Deductions |
|
IMMIGRATION
- Visa-exempt nationals (also referred to as Category A nationals) can travel to Nicaragua without an entry visa and stay for a period of up to 90 days, extendable in country for an additional 90 days at the discretion of immigration authorities.
- Category B visa nationals can opt to secure a visa at a Nicaraguan consular post or on arrival at the Nicaraguan port of entry.
- Category C visa nationals must obtain a Consulted Visa from a Nicaraguan consular post with prior authorization from the Immigration Department of Nicaragua.
- As such, these visas usually involve an extended processing time.
- Under Nicaraguan law, travelers seeking to enter the country to perform professional activities or undertake employment must obtain a work permit following admission into the country.
- However, according to the Visa and Residence Permits subdivision of the General Directorate of Migrations and Foreign Citizens, travelers seeking to enter Nicaragua to exercise professional activities for short time periods (up to 90 days) are not normally issued any type of special permit.
- The issuance of work visas requires the submission of extensive documentation.
- The validity of the Work Permit usually corresponds to the length of time the foreign national will be performing work activities in Nicaragua (up to one year) and may be extended for up to one year.
|
Type of Visa/ Permit |
Documentation |
Validity |
Eligibility |
|
Work Permit |
|
1 year (can be extended) |
Under Nicaraguan law, travelers seeking to enter the country to perform professional activities or undertake employment must obtain a work permit following admission into the country. |
VALUE ADDED TAX
- VAT is imposed at a 15% rate on the sale of goods, rendering of services, grant of use of assets, and import of goods.
- Export of goods and services are subject to a 0% rate.
- VAT exemptions are available for certain items, including medicine, real estate transfer, sale of used goods, basic food products, credit instruments, tuition, and textbooks and educational supplies.
|
VAT |
|
|
Standard Rate |
15% |
|
Zero Rate |
0% |
|
Exempt Rate |
0% |
WITHHOLDING TAX
Dividends
- Dividends paid to a nonresident are subject to a 15% withholding tax
- The rate increases to 17% if the payment is made to a resident of a tax haven jurisdiction
Interest
- Interest paid to a nonresident or a nonfinancial institution is subject to a 15% withholding tax
- The rate increases to 17% if the payment is made to a resident of a tax haven jurisdiction
Royalties
- A15% withholding tax applies to patent royalties paid to a nonresident
- The rate increases to 17% if the payment is made to a resident of a tax haven jurisdiction
Technical Service Fees
- Technical service fees paid to a nonresident are subject to a 15% withholding ta
- The rate increases to 17% if the payment is made to a resident of a tax have jurisdiction
|
WHT |
|
|
Dividends: - |
|
|
Nonresident |
15% |
|
Residents of a Tax Haven |
17% |
|
Interest: - |
|
|
Nonresident |
15% |
|
Residents of a Tax Haven |
17% |
|
Royalties: - |
|
|
Nonresident |
15% |
|
Residents of a Tax Haven |
17% |
|
Technical Service Fees: - |
|
|
Nonresidents |
15% |
|
Residents of a Tax Haven |
17% |
TERMINATION
- Employees may be terminated for just cause, but the employer must request authorization for termination from the Labor Inspection Department ahead of time.
- If the employer terminates without authorization, the employee can sue.
- Proportional vacation pay and annual bonus pay are due to the employee on termination.
- The employee is entitled to indemnification for years of service if it is an indefinite term contract and either the employee resigned with 15 days’ notice or the employee is dismissed with just cause.
- In general, the employee is entitled to pay as follows:
-
- up to three years of service: one month’s salary for each year or fraction of a year
- four to six years: 20 days’ salary for each year
- 7+ years: five months of salary
STATUTORY BENEFITS
- These are mandatory benefits as postulated by law
- These include probationary period, annual leave, public holidays, sick leave, maternity leave, overtime pay, severance pay and 13th month pay.
- Statutory benefits also include social security benefits
|
Statutory Benefits |
|
Probationary Period |
|
Annual Leave |
|
Public Holidays |
|
Maternity Leave |
|
Sick Leave |
|
Overtime Pay |
|
Severance Pay |
|
13th Month Pay |
|
Social Security Benefits |
PAYMENTS AND INVOICING
- The ordinary tax year runs from 1 January through 31 December.
- Employers are responsible for withholding income taxes and social security contributions from the employees’ salaries on a monthly basis.
- Employees are not required to file an annual income tax return if their only source of income is employment compensation.
- Returns must be filed and any tax due must be paid within two months after the end of the tax year.
- Self-employed individuals and individuals with a trade or business must pay installments of advance income tax.
EASE OF DOING BUSINESS
- The ease of doing business index is an index created by Simeon Djankov, an economist at the Central and Eastern Europe sector of the World Bank Group.
- Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.
- According to the World Bank Nicaragua ranked 142nd in the World in 2019 in terms of ease of doing business.
