Nicaragua: Reform to the Tax Concertation Law (Law No. 1279)

Managua, April 9, 2026 — On April 8, 2026, the National Assembly approved Law No. 1279, which reforms and partially repeals Law No. 822 (Tax Concertation Law). The reform was published in La Gaceta, Official Gazette No. 61, and entered into force immediately.

What Changes?

The reform amends four provisions of Law No. 822, repeals an additional subsection, and updates the ISC (Selective Consumption Tax) rates set out in Annex I for a broad range of goods. The changes primarily focus on the determination of the taxable base for both ISC and VAT on specific beverages and consumer products.

VAT Taxable Base (Art. 126)

For alcoholic beverages, beer, cigars, cigarillos, cigarettes, juices, soft drinks, carbonated water, and energy drinks, the taxable base is now the distributor price. Previously, several of these products used the retailer price, which is a higher level in the commercial chain.

ISC Tax Credit (Art. 157)

The tax credit is expanded to include imported finished goods subject to ISC whose transfer is based on the distributor price, aligning the provision with the new taxable base framework.

ISC Taxable Base for Domestic Transfers (Art. 167)

Juices, soft drinks, carbonated water, and energy drinks are now taxed based on the distributor price. For alcoholic beverages, wines, and beers, the ad valorem component is calculated on the distributor price, while the specific component is calculated per liter of alcohol. Cigars and cigarettes maintain their specific tax regime pursuant to Articles 189 and 190 of Law No. 822.

ISC Taxable Base on Imports (Art. 171)

For imports of alcoholic beverages, wines, and beers, the specific component is calculated per liter of alcohol.

Repeal of Subsection 3 of Article 130

This provision is eliminated to align the legal framework with the new taxable base approach.

Reduction of ISC Rates

The reform updates Annex I of Law No. 822 by setting the ISC rate to zero percent for various food products that were previously taxed. These include turkey meat, fresh fruits such as grapes, apples, pears, and apricots, dried fruits such as bananas and apples, and several types of nuts including pistachios, almonds, hazelnuts, walnuts, and chestnuts.

This change does not constitute a formal exemption but establishes a zero rate, which has equivalent practical effects. For importers and distributors, this eliminates a cost component associated with importation and commercialization, potentially reducing final consumer prices.

Business Implications

The shift from retailer price to distributor price as the reference for calculating ISC and VAT may reduce the taxable base for operators in the beverage sector, with a corresponding positive impact on their tax burden. Additionally, the expansion of the tax credit under Article 157 provides greater clarity and benefits for importers operating under the updated regime.

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