IGIC

IGIC stands for the Impuesto General a las Ventas, which translates to General Sales Tax in English. It is a consumption tax levied on the sale of goods and services within the territory of Nicaragua. The tax is applied at various stages of production and distribution, ultimately aiming to be borne by the final consumer.

The standard rate of IGIC in Nicaragua is 15%. However, there are certain goods and services that are subject to a reduced rate of 5% or are exempt from the tax altogether. These exemptions and reduced rates are typically applied to essential items and services considered necessary for basic living.

Businesses registered for IGIC are required to collect the tax on their sales and remit it to the Nicaraguan tax authority, known as the Dirección General de Ingresos (DGI). Businesses can typically deduct the IGIC they have paid on their purchases (known as input tax) from the IGIC they have collected on their sales (output tax). This mechanism ensures that the tax is levied only on the value added at each stage of the supply chain.

The IGIC plays a significant role in Nicaragua's public revenue collection, contributing a substantial portion to the national budget. The administration and enforcement of IGIC are governed by specific tax laws and regulations established by the Nicaraguan government. Compliance with IGIC obligations is mandatory for all registered businesses.