Nicaragua

Foreign tax credit

The Nicaragua tax system does not recognise any form of foreign tax credit.

Tourism incentives

Under present law, and on a case-by-case basis, new companies with tourist activities may request and the government may grant, during the facilities’ construction phase, total exemption of customs duties and partial or total CIT exemption for a maximum period of ten years.

Renewable energy incentives

The renewable energy sector is covered by a special law with tax benefits or exemptions in CIT, VAT, customs duties, and municipal tax.

Free trade zones (FTZs)

The Nicaraguan government abrogated Decree No. 46-91, and enacted Law 917/2015 - Export Free Trade Zone Law, which provides for several types of export free zones (e.g. for processing, industrial production, logistics and outsourcing services).

Although the law does not bring major changes with respect to Decree No. 46-91, it has modified the tax exemption period to FTZ users, and, as of the publication of this law (i.e. 16 October 2015), they will qualify for a ten-year income tax holiday, which can be extended for an additional ten years. Once the full tax exemption expires, qualifying companies will be entitled to a 60% exemption. These incentives are subject to the approval of the National Free Zone Commission.

Qualifying companies are entitled to exemptions from capital tax and stamp duties, indirect and excise taxes, export taxes on locally made products, municipal taxes, and the immovable property transfer tax and capital gains tax on the alienation of immovable property if they are closing their operations in the FTZ and the immovable property will remain there.

Raw materials, machinery, equipment, spare parts, samples, molds, and accessories required for the operation of companies in the FTZs are exempt from import duties.

Special Economic Zones (SEZs)

On October 30, 2025, Nicaragua’s National Assembly approved Law No. 1264, known as the Law on Belt and Road Special Economic Zones. This legislation establishes the legal basis for setting up, managing, and developing Special Economic Zones (SEZs) across the country.

The law introduces a unique system of tax, customs and administrative incentives. These measures are intended to boost international commerce, foster regional growth, encourage productive partnerships, and generate formal employment. 

Key Incentives Provided:

The law grants full (100%) exemptions for an initial ten-year period —with the option for indefinite renewal— on the following:

• Corporate Income Tax (CIT) for business activities
• WHT on dividends, interest, commissions, and professional services
• Value Added Tax (VAT)
• Selective Consumption Tax
• Municipal taxes and customs tariffs

These benefits are accessible to domestic, foreign, joint-venture, and public enterprises operating within the SEZs.

Governance and Oversight:

A Special Commission coordinated by the Presidential Advisor for Investment Promotion, Trade, and International Cooperation oversees the SEZ regime in coordination with the National Free Zones Commission, which is responsible for direct management of the zones.
The law became effective immediately upon its publication in the official gazette on October 31, 2025.