Nicaragua Employer Payroll — INSS Planilla, IR-122 & IR-106

Confirm the employer holds valid registrations before any payroll is run. Two registrations are mandatory: INSS employer registration (Régimen Integral) and a DGI RUC as a withholding agent. Collect the employee roster, gross monthly salaries in NIO/C$, pay frequency (monthly or quincenal), sector for each employee, and employer headcount band (< 50 or ≥ 50 employees, which determines the employer INSS rate). If either registration is missing, stop and escalate — payroll cannot legally be processed.

Validate each employee's gross salary against the applicable sector minimum wage (CNSM rates effective 1 March 2025, e.g., C$10,913.54/month for commerce, C$8,046.00 for manufacturing). Flag any salary below the sector floor — it is illegal to pay less. Confirm residence status for each employee; non-residents are subject to a flat 20% definitive IR withholding rather than the progressive bracket table, so misclassification materially changes the tax.

Compute each employee's net pay using the deterministic method: (1) deduct employee INSS at 7% of gross to get the IR taxable base; (2) annualize the monthly taxable figure; (3) apply the Ley 822 Art. 23 progressive IR bracket table (0% up to C$100,000; 15% on C$100,001–200,000; 20% on C$200,001–350,000; 25% on C$350,001–500,000; 30% above C$500,000); (4) divide annual IR by 12 for the monthly withholding; (5) compute net pay. For non-residents apply the flat 20% definitive rate to gross. Also compute employer INSS (21.5% or 22.5% of gross) and INATEC (2% of gross) for accrual purposes.

Upload the monthly planilla to the INSS SIE (Sistema de Información Empresarial) portal. The planilla bundles the employee INSS deductions (7%), employer INSS contributions (21.5% or 22.5%), and the INATEC 2% levy — all on a single combined invoice. The due date is within the first 10 business days of the month following the payroll period. Late submission triggers a 2% monthly mora surcharge plus potential administrative fines.

File Form IR-122 via the DGI Ventanilla Electrónica Tributaria (VET) portal and remit the aggregated monthly IR (rentas del trabajo) withholdings. The deadline is commonly stated as the first 5 working days of the following month (confirm the exact calendar deadline with the reviewer, as the precise statutory day has not been confirmed from an official DGI source). The IR-122 covers all employees' monthly withholdings in a single remittance.

Post the double-entry payroll journal: debit salary expense (gross), employer INSS expense, and INATEC expense; credit net pay payable, INSS payable, INATEC payable, and IR withholding payable. Confirm all payables are cleared against the bank remittances. At year-end (deadline: 90 days after 31 December — for TY2025, the DGI announced 28 February 2026), support any employees required to file the annual IR-106 return (employees with two or more employers, or those with education/health/professional-service deductions).