Nicaragua – Applying for a VAT credit, a current issue in Nicaragua


Each month, taxpayers who are responsible collectors of value added tax (VAT) for the benefit of the Tax Administration Department (DGI), are required to declare and pay it. Likewise, in the same declaration, these taxpayers apply the right to apply the VAT credit by payment on the purchase of goods or payment for services necessary for their commercial activity; among this type of taxpayers who play the role of responsible VAT collectors, we find: large taxpayers (GRACOS) and main taxpayers.

By a notice published by the DGI on July 1, 2022he was made aware of the common mistakes that taxpayers make when entering invoice numbers in support of tax credits they need to apply, summarized below:

  1. Do not write the serial or branch letter in the case of invoices having it; DGI suggested that the serial letter be placed before the invoice number, with no space between the serial letter and the correlating invoice number; and
  2. In the case of the customs declaration, do not report them correctly; the customs declaration must be named according to the format of the DGA (currently denotes the letter “L” followed by a correlative number).

The notice comes as a result of inconveniences in the application of the tax credit, increased during the months of April and May 2022; which caused the automatic rejection of the accreditation model in the platform of the electronic tax platform (VET), generating a blockage at the time of making the tax filled monthly, or causing the data processing to fail which, causing delays to the taxpayer in fulfilling his obligation to declare and pay VAT and his right to credit the corresponding VAT.

There were other circumstances qualified as errors by the DGI when declaring the accreditation of VAT paid by taxpayers, such as:

  1. Supplier insolvency.
  2. Violation of supplier’s tax obligations.
  3. VAT accreditation for invoices declared by the supplier in previous months.

Regarding these reasons for rejection or errors in the VAT approval, it is still expected that the DGI will issue an official communication on the mechanisms to be applied by the taxpayer to avoid being affected in the application of the tax credit. corresponding tax.

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