Country Listing

Nicaragua Table of Contents


Tax Reform

The Chamorro government instituted tax reform in July 1990. New measures included lower tariff rates, lower income tax, and payment of tax in gold córdobas. The reform reduced top tariff rates from 61 percent to 20 percent and top income tax from 60 percent to 38.5 percent. Collection of tax may have increased because of reduced evasion, but tax revenues, reported to be 23.5 percent of GDP in 1989, fell to only 15 percent by 1990.

To encourage investment, the government eliminated a 2 percent export tax on coffee and cotton and lowered the general sales tax from 15 percent to 10 percent. The government also granted tax incentives for exporters of nontraditional products under a new export-promotion act. Like previous governments, the Chamorro administration announced it would extend preferential long-term credit for agro-industrial development.

Data as of December 1993