IMPORTANCE OF REVISION TO

LAW N°.897,
“LAW OF REFORMS AND ADDITIONS TO LAW
N°. 822, TAX CONCILIATION LAW”

O
n February 28th of this year 2019, Law
No. 987, Law on Reforms and Addi-
tions to Law No. 822, Tax Conciliation
Law (Law No. 987), came into force,
which reflected important structural changes to the
Nicaraguan tributary system. Among the main chan-
ges made to this law, the changes that have impac-
ted the most among the various economic agents
and taxpayers, have been the reforms to the Income
Tax (IR) and the Value Added Tax (VAT). The initial
consideration of this law was the consensus on the
part, of the legislative body and the tax administra-
tion of the need to increase the tax burden and to
give greater importance to IR and VAT as primary
sources of fundraising for the State, however since it
is such an important change to the Nicaraguan tax
system, this reform also brought with it, the need to
periodically review, discuss and monitor the chan-
ges implemented to evaluate the effectiveness and
performance of its entry into force.
It is for the aforementioned, that Law No. 987 in its
sixth article, Section IV, establishes that this reform
is always subject to its due review by the compe-
tent authorities with the purpose of maintaining a
constant monitoring, supervision and surveillance
of each and every one of the tax measures adopted
in the law and its regulations. The importance of
this revision is based on the effects produced in the
collection and in the performance of the economic
and productive activities of the different economic,
social, professional and business sectors of the
country.
The reviewing period established in the abovemen-
tioned law delimited that this would be finished by
the end of the first quarter at the latest after the en-
try into force , that was, at the end of May. However,
it was a month after the expiration of this period, on
June 27th, that the reviewing process began. The
guidelines for the revision of the law are based on
the call for a comprehensive review process bet-
ween government authorities and the private sector
as a whole, in order to know and evaluate the re-
sults obtained as a result of the application of the
reform. Also, it is important to take into account that adjustment measures will be discussed and agreed upon
to improve the implementation of the law.

It is expected that with this revision it will be possible to overcome possible difficulties and correct any distor-
tions that could arise when implementing it, with the purpose of promoting the rapid growth of the business
productive sector and guaranteeing the strengthening and sustainability of the Nicaraguan tax system.

If you have any questions or concerns about the subject, please do not hesitate to contact us.

Written by:

Gustavo-Adolfo Vargas Sara Ortega Corriols

Partner Paralegal
gustavo.vargas@ariaslaw.com sara.ortega@ariaslaw.com
(505) 2298-1360 (505) 2298-1360