The National Assembly of Nicaragua approved a tax reform on August 20 that does away with tax exemptions for religious institutions, requiring them to pay income tax on activities and assets even if exclusively intended for religious purposes.

According to independent Nicaraguan media, the amendment to Law 822 will require all Churches, regardless of denomination, to follow a tax regime similar to that of the private economic sector, where legitimate profit is the goal of activity.

Offerings, alms, and donations from the faithful will, therefore, be subject to income tax at rates ranging from 10 to 30 per cent.

It is noted that the elimination of tax exemptions will have a severe impact on the operational and financial capabilities of religious communities, which are engaged in educational, social, and assistance efforts, with significant consequences particularly for the most vulnerable social groups.

The reform comes amid a difficult context for the Catholic Church and other religious and civil organizations.

Following the arrest and expulsion of priests, the Nicaraguan government recently revoked the legal status of another 1,500 non-governmental organizations, many of which were religious, transferring their assets to the State.

Regarding this decision, the United Nations High Commissioner for Human Rights expressed "deep concern," stating in a communiqué that the Nicaraguan government's initiative effectively "threatens freedom of religion and freedom of association," and calling for the "guaranteeing and protection of fundamental freedoms" of individuals.