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DISCOVER NICARAGUA120TH REGULAR SESSION ON LAND

VALUATION AND TAXATION (ICLPST)

NATIONAL AND LOCAL GOVERNMENT

FINANCING

NICARAGUA

PRESENTER: JORGE L. ICABALCETA

NATIONAL AUTONOMOUS UNIVERSITY OF

NICARAGUA (UNAN)

MANAGUA, NICARAGUA

TAOYUAN, TAIWAN, SEPTEMBER 26, 2013

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1 Corinthians 13:4-8

4 Love is patient, love is kind. It

does not envy, it does not boast, it is

not proud. 5 It does not dishonor

others, it is not self-seeking, it is not

easily angered, it keeps no record of

wrongs. 6 Love does not delight in

evil but rejoices with the truth. 7 It

always protects, always trusts,

always hopes, always perseveres.8

Love never fails.

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COUNTRY NAME: NICARAGUA

GEOGRAPHIC COORDINATES: 12 08 N, 86 15 W

TIME DIFFERENCE: UTC-6

ADMINISTRATIVE DIVISIONS:

15 DEPARTMENTS AND 2 AUTONOMOUS

REGIONS

NATIONAL HOLIDAY: INDEPENDENCE DAY

SEPTEMBER 15

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Executive Branch (Power)

Legislative Branch (Power)

Judicial Branch (Power)

Electoral Branch (Power)

President, Ministers

Unicameral Assembly, 92 members

Supreme Court, 9 Magistrates

Supreme Electoral Council, 5 Magistrates

Division of Powers in Nicaragua

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EXECUTIVE BRANCH

PRESIDENT AND HEAD OF STATE DANIEL

ORTEGA SAAVADRA

ELECTIONS HELD EVERY 6 YEARS FOR

PRESIDENT, VICEPRESIDENT, NATIONAL

ASSEMBLY

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Agriculture - products:

coffee, bananas, sugarcane, rice, corn,

tobacco, sesame, soya, beans; beef, veal,

pork, poultry, dairy products; shrimp, lobsters,

cotton

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Industries:

food processing, chemicals, machinery and

metal products, knit and woven apparel,

petroleum refining and distribution, beverages,

footwear, wood, electric wire harness

manufacturing, mining

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Exports - commodities:

coffee, beef, gold, sugar, peanuts, shrimp and

lobster, tobacco, cigars, automobile wiring

harnesses, textiles, apparel, cotton

Exports - partners:

US 54%, Canada 8.4%, Venezuela 7.4%, El

Salvador 4.5% (2012)

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Imports - commodities:

consumer goods, machinery and equipment,

raw materials, petroleum products

Imports - partners:

US 18.8%, Venezuela 14.4%, Mexico 12.1%,

Costa Rica 8.8%, China 7.8%, Guatemala

7.6%, El Salvador 5.1% (2012)

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LEGAL FRAMEWORK OF FISCAL

ADMINISTRATION

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Two levels of government

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• Constitution of Nicaragua

• Municipality law, its ammendmets and bylaws

• Municipal Arbitrage Plan

• Law of fiscal and commercial justice

• Law of fiscal equity

• Law of real estate

• Law of municipal solvency

• Law of circulation and vehicular regime

• Municipal Ordinances

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NATIONAL TAXES

1.Income tax (0-30%)

2.Dividends tax (30-35%)

3.Bequest, donations and tranfers tax (4%)

4.V.A.T (0-15%)

5.Selective consumption tax (0-100%)

6. Fiscal stamps

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DISCOVER NICARAGUAPROGRESSIVE TAX SYSTEM OF NICARAGUA

DISCOVER NICARAGUALOCAL SOURCES OF REVENUE

CLASIFICATION

REVENUES

1. LOCAL TAXES

2. OTHER REVENUES

1.1- BUSINESS LICENSES

1.2- MUNICIPAL INCOME TAX

1.3- PROPERTY TAX

1.4- VEHICULE TAX

1.5- SPECIAL ACTIVITIES

2.1- USAGE FEE

2.2- SERVICE FEES

2.3- SPECIAL CONTRIBUTIONS

2.4. CENTRAL GOVERNMENT TRANSFERS (2.5% OF NATIONAL BUDGET FOR ALL MAYORALTIES)

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1. New business (1% of starting capital)

2. Established business (2%)

2. Mobile salesperson (various)

3. Cattle slaughter patent (various)

4. Petrochemical products are not taxed at the

municipal level but businesses do get a local

business license

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5. Local Income/Sales taxes (1%)

6. Banks pay 0.5% of the volume of operations

7. New construction and remo tax (1%) but

residential homes are exempt

8. Public events (5%) (festivals, concerts, etc)

9. Property tax (1% on the 80% of the

assessed value of the dwelling)

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10. Utilization of municipal areas

- Ramps

- Reserved Parking

- Advertising in public property

- Use of sidewalks, streets o public terrains

(municipal)

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10. Utilization of municipal areas (continued)

- Construction on public (municipal) areas

- Use of vacant lots

- Extraction of lumber, sand, stone, any other

materials from municipal areas

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11. Vehicular TaxCATEGORIA VEHICULAR IMPUESTO

1- Bicycle 25.00

2- Motorcycle 50.00

3- Agr. Tractors and Machinery 75.00

4- Cars, pickups, jeeps 100.00

5- Taxis and commercial pickups 125.00

6- Microbuses of commercial use 150.00

7- Buses of commercial use 300.00

8- Trucks less than 7 Ton. 400.00

9- Trucks until 12 Ton. 600.00

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12. Special contributions (User Charges)

a- Urban street improvement (paving)

b- Maintenance of rural roads and bridges

c- Entrance to swimming locations

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DISCOVER NICARAGUALocal Government

Collection Mechanisms Impact

• Voluntary payments (17.8%)

• Administrative collections (82%)

• Executive collections(0.2%)

17.8%

82.0%

0.2%

PVCA

CE

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Local government finance

example: the municipality of

Matagalpa in Nicaragua

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Composed of 111 communities and 88 neighborhoods

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Socioeconomics of the municipality of Matagalpa

Population: 200,000

Urban: 120, 000

Rural: 80,000

Annual population growth: 3.87% anual (1995 - 2000)

Population density: 312.18 inhabitantes/Km2

Temperature: 16°-25°C.

Climate: Rainy (June-december) and dry season.

Composed of 111 communities and 88 neighborhoods

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*Non-personal

services include

basic services,

leases, insurances,

office stationary,

tools, and other

48

35

116

Percent (%) Distribution of Expenditures Municipality of Matagalpa (C$117 million) 2011

Eco. Development projects Salaries non-personal services* Other expenditures

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Thanks for your

attention

Any questions??