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Tax reform harms legal tobacco trademarks

By Guy José Bendaña-Guerrero & Asociados - 05/04/2019
Tax reform harms legal tobacco trademarks

On 28 February, changes to the 2012 Ley de Concertación Tributaria (tax concertation law) came into effect after voting by the Nicaraguan Congress. With the goal of increasing domestic revenue mobilization, the new tax reform applies Value Added Tax (VAT) to several basic consumer goods, among them cigarettes.

Such change has generated concern on the tobacco industry, who warn about the decrease of their products market and the “logical” increase of smuggling and counterfeited products. Gustavo Mercado, External Affairs Manager for British American Tobacco, said to La Prensa that the company has yet to quantify specifically the impact of the reform, but early reports suggest that just in March consumer consumption of their cigarettes fell between 50 and 55 percent.

Carmen Hilleprand, president of the Chamber of Commerce and Services of Nicaragua (CCSN), offered a broader perspective of the market. “Until February mainly two brands of counterfeited cigarettes operated in the Nicaraguan market, while today there are over 12 already unfairly competing with legal tobacco companies, who since the reform are paying up to 210 percent more taxes”.

By Guy José Bendaña-Guerrero & Asociados - 05/04/2019
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Guy José Bendaña-Guerrero & Asociados

The Law Firm, specialized in the field of Intellectual Property, formerly known as Henry Caldera & Henry Caldera-Pallais, was founded in 1907 by Mr. Henry Caldera, as part of a three-way operation consisting also of the import and retail of goods. With time, these three operations became separate enterprises. That same year, and through the efforts of Mr. Caldera, Nicaragua had its first Trademark Law.

In the late 1930’s, Mr. Caldera’s older son, Henry Caldera-Pallais, after obtaining a Law degree in Nicaragua, furthered his studies in the University of Michigan, where he graduated to become a U.S. Registered Patent Agent. During his stay in the United States, he gained experience working with the New York firm of Lagner, Parry, Card and Largner. In the late 1940’s, Mr. Caldera-Pallais returned to Nicaragua to take charge of the Law Firm, which became known as Henry Caldera & Henry Caldera-Pallais.