The income tax withholding rates were recently modified by Ministerial Agreement 34-2002, effective from July 1 2002.

The new rates are as follows:

  • 1% on the sale and purchase of agricultural products;

  • 2% on the purchase of goods, general services, construction services and leases; and

  • 4% on occasional earnings.

The temporary suspension of the withholding tax obligation for producers or merchants of coffee beans on coffee exports remains in force.

The minimum amount on which to apply withholding tax is from C$1,000 (C$15 equals US$1 dollar).

Persons obliged to carry out withholdings include:

  • state entities;

  • legal persons;

  • those responsible for withholding value added tax and specific consumption tax; and

  • natural and legal persons that sell their movables and immovables.

Through the ministerial agreement, the Tax Administration aims to increase tax income and reduce the fiscal deficit.

For further information on this topic please contact Carlos Taboada Rodriguez at Taboada & Asociados by telephone (+505 2 683 839) or by fax (+505 2 668 088) or by email ([email protected]). The Taboada & Asociados website can be accessed at