Nicaragua

Corporate - Tax credits and incentives

Last reviewed - 07 July 2020

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 amended Decree No. 46-91, and enacted Law 915/2015 - 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.