On December 17th, 2020, Law No. 1054 "Signage Law" came into force with its publication in the Official Daily (the "Law"), which regulates the advertising made by signs located throughout the Nicaraguan territory.
This Law establishes three types of actions:
- Installation permit: any taxpayer wishing to carry out advertising by means of signs must request a permit from the applicable Municipality.
- Renewal of permit: it must be requested 45 days prior to the expiration date and once the taxpayer is notified of the acceptance, payment of applicable tax must be made.
- Relocation, de-installation or demolition of signs: these actions are not subject to the payment of taxes, but applicable expenses must be assumed by the taxpayer.
And it classifies the signs as follows, according to their location and nature:
- Signs attached to buildings
- Signs fixed to the ground
- Moveable Signs
- Temporary Signs
Which in turn are subclassified into different types and are subject to payment of taxes to the municipality ranging from US$ 0.00 to US$ 1,000.00 dollars, according to their classification and category, as established in article 13 of the Law.
Taxes for massive signage directed to large taxpayers that distribute and massively place nonpermanent signs at the distribution sites where services or products are provided, also apply. Annual taxes amounts to US$ 4.00 dollars for each distribution point. The person publicizing products and services will be responsible for the payment of this tax.
In addition to the taxes of permits for the installation or renewal of signs, the Law establishes two types of fees that must be paid:
- Supervision fee for installation of mega signs: US$ 100.00 dollars to be paid by the taxpayer once the permit y granted and, prior to the installation or relocation of the sign.
- Fee for use of public space for signs fixed to the ground: 5% in addition to the applicable annual tax, to be paid in the month of January of each year.
Persons wishing to make any type of application for a sign must be solvent with their tax obligations before the applicable municipality. Permits are valid for one calendar year and must be paid in January of each year, except for temporary signs, which will have a different term. Taxes and fees must be paid in local currency, based on to the official exchange rate for the date of payment, as published by the Central Bank of Nicaragua.
Signs installed in buildings that are not visible from the outside and the signs painted, adhered to, or attached to walls that are installed by individuals in their homes to indicate their occupation and that, do not measure more than 0.50 square meters, are exempted from payment of taxes and fees. The Law also exempts different types of humanitarian, religious, State, urban and artistic works provided they do not include commercial messages, traffic signs, urban or rural nomenclatures, amongst others. We also highlight the exemption of signage of new micro and small enterprises during the first year of operation, provided signs are not larger than 10 square meters.
The Law establishes prohibitions for signs that hinder or disturb public order, such as signs containing reflectors or accessories that affect vehicular and pedestrian visibility, putting safety at risk, or when their graphic content and/or written message promotes actions or ideas contrary to the Law, morals and decency, amongst others. It also sanctions those who install signs without permits with a fine equivalent to the applicable the tax and also with the immediate order to uninstall the sign at the owner's expense.
Taxpayers who, having obtained the sign installation permit, fail to comply with the technical structural design submitted and previously approved by the municipality, will be fined an amount equivalent to one hundred percent of the applicable annual tax, the permit will be revoked, and the sign will be removed. In case the municipality notifies the taxpayer about the state of deterioration of a sign and pertinent measures are not taken, a fine equivalent to ten percent of the cost of the applicable annual tax will be applied.