"We are at the right place, at the right moment, and it keeps getting better. We were pioneers in benefiting from the new incentive laws and the Government continues to modify them to favor new investors".- Chris Berry, Owner, Piedras y Olas Hotel.
Generous Investment Incentives
Nicaragua has various incentive laws for priority sectors, such as the Tourism Incentive Law, the Renewable Energy Incentive Law and the Free Trade Zones Law (for export-oriented industries, including light manufacturing, agribusiness and contact centers). According to international agreements with WTO members (Doha Article VII), Nicaragua is one of the few countries in the region that is still able to provide free zone and other tax incentives to exporters.
For more detailed information on available incentives for specific projects please contact us via email at
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
Free Zone Incentives Law (Decree 46-91)
In 1991, the Government of Nicaragua approved a series of laws aimed at supporting the Export Processing Zones. These laws are currently being modified to provide even more benefits to the companies governed by this program, however they currently provide:
Total tax exemption on income and property taxes
Total exemption on municipal taxes
Total exemption on taxes for machinery, equipment and raw material, and on transport and support services for the Free Trade Zones
Total tax exemption on value added tax
All permits can be obtained in less than six weeks.
Tourism Investment Incentives Law (Law 306)
Tourism is a very dynamic industry in Nicaragua, due to the country's breathtaking natural resources and the fiscal incentives offered to investments in this industry.
Qualified tourism projects can receive the following tax benefits under Law #306:
80% to 90% income tax (IR) exemption
Property tax exemption for 10 years (IBI)
Import tax and value-added tax exemption on the purchase of accessories, furniture, or equipment.
Tax exemptions related to project implementation:
Value-added tax on design/engineering and construction services
Exoneration of import duties and taxes and of the General Value Tax (I.G.V.) for the local purchase of construction materials and fixed building accessories.
Tax incentives can be extended if project undergoes extensive expansions
Over 300 projects have been approved to benefit from this law since 1999.
Forestry Incentives Law (Law 462)
Nicaragua has 4.9 million hectares (49,000 sq kilometers) of suitable agricultural land available, of which only 1.0 million hectares (10,000 sq kilometers) are being utilized. With over 2.5 million hectares of lakes and lagoons (25,000 sq kilometers), the country enjoys ample water sources.
The New Forestry Incentive Law of August 2003 provides generous tax incentives for forestry plantations:
1. 10 year tax exemption on:
• 50 percent of municipal taxes on sale of land. • 50 percent of profits. • The payment of taxes on real estate in the case of forest plantations and areas under forest management.
2. Companies investing in forest plantations can reduce 50 percent of the amount invested as costs.
3. Exemption from import duties for companies of secondary transformation and third transformation that import machinery, equipment and accessories excluding saw mills.
4. All state institutions must give priority in their acquisitions, to goods made from certified wood. Recognition of up to five percent higher pricing will benefit the certified producer.
5. 100 percent deduction of income tax when land is destined to reforestation projects or forest plantations.
Renewable Energy Incentives law (Law 532)
The Law for the Promotion of Energy Generation from Renewable Sources promotes the development of new projects, expansion of existing ones, and biomass and biogas energy sources. Fiscal, economic and financial incentives are granted to this effect: 1. Exemption of customs duties on the importation of machinery, equipment, material and raw material necessary for all construction of stations, including sub transmission lines necessary for energy transportation from the generation facility to the Sistema Interconectado Nacional, or National Interconnected Grid (SIN). 2. Exemption of the Value Added Tax (IVA) levied on machinery, equipment, material and raw material utilized during pre-investment stage, construction of structures, including the construction of the sub transmission lines necessary to transport energy to the Sistema Interconectado Nacional or National Interconnected Grid (SIN). For “isolated systems” with their own generation facilities, this exoneration covers pre investment, construction and all the investment made in distribution grids associated with the project (i.e. panels and solar batteries for solar energy generation). 3. Exemption of the income tax (IR) for a maximum period of seven years. During this same period, the income derived from the sale of carbon dioxide bonds will also be exempted. 4. Exemption of all the Municipal Taxes on real estate, sales and registrations during the construction of a project, for a period of ten years to be applied in the following manner: exoneration of 75 percent during the first three years; 50 percent the five following years and 25 percent for the last two years. Fixed investment in machinery, equipment, and hydroelectric dams will be exempted from all taxes and duties, for a period of ten years. 5. Exemption of taxes on the exploitation of natural resources for a maximum period of five years after the beginning of operations. 6. Exemption of Fiscal Seals Tax incurred by the construction or operation of the project or expansion of a project for a period of ten years.
Temporary Admissions System (Law 382)
Companies that directly or indirectly export at least 25 percent of total production (no less than US$50,000 per year) may apply to the Temporary Admission System. This system allows both the entry of merchandise into the national customs territory, and the local purchase of goods or raw material without paying any kind of taxes or duties. This merchandise must be re-exported after being subjected to a process of transformation, repair or alteration. The company must request a suspension of duties and tariffs to competent authorities. If the company cannot apply for the suspension due to tax management reasons, it may later apply for a tax return, as long as it re-exports the merchandise that was temporarily admitted into the country. This system is managed by the National Commission for Export Promotion (CNPE).
