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On November 23, 2024, the Regulation of Law No. 1211, “Tourism Development Incentives Law,” came into effect with the goal of promoting investment in the tourism sector in Nicaragua. 

This regulation outlines the detailed rules for accessing fiscal benefits, describes the obligations of investors, and defines the procedures that tourism projects must follow to qualify for these incentives.  

The most important aspects of the regulation are: 

Scope of application 

The regulation applies to both individuals and legal entities, whether national or foreign, who wish to benefit from the fiscal incentives provided by the law. 

A wide range of projects are considered as tourism developments, including: 

• Hotels and accommodation centers (such as hotels, hostels, apart-hotels, eco-lodges, condo-hotels, and hostels). 

• Restaurants and recreational centers (offering food and drinks to the public). 

• Amusement parks, museums, zoos, and art galleries. 

Those interested in accessing fiscal benefits must submit an application addressed to the Higher Directorate of Nicaraguan Institute of Tourism (INTUR), along with a series of documents that must meet certain requirements, including: 

• A detailed project profile, including its name, location, investment amount, planned tourism activity, and expected job creation. 

• Legal documentation such as the property title, construction permit, environmental clearance, and tax and municipal solvency certificates. For legal entities, the public deed of incorporation must also be presented, duly registered, along with other supporting documents proving compliance with current regulations for business entities. 

The Tourism Incentives Committee 

The regulation establishes the creation of a Tourism Incentives Committee, whose secretary will be an official appointed by INTUR. This committee will be responsible for evaluating applications and will have up to 60 days to approve or reject projects once all requirements are met. 

Fiscal incentives 

This law provides a variety of significant fiscal incentives for approved tourism projects, including: 

• Income Tax (IR) exemption: Up to 10 years of exemption on income generated from tourism-related activities. 

• Value Added Tax (VAT), Import Duty (DAI), and Selective Consumption Tax (ISC) exemptions: Applicable to local purchases and imports of construction materials, furniture, equipment, hiring related services, and the purchase of accessories during the investment phase of the works. 

• Property Tax (IBI) exemption: Up to 10 years of exemption for areas of the property used exclusively for tourism activities. 

Individuals or companies receiving these incentives must comply with several obligations, including: 

• Begin construction of the projects within 6 months of signing the contract with INTUR and maintain the investment for the required term. 

• Ensure compliance with environmental and safety standards, allowing inspections by INTUR’s Infrastructure and Tourism Investments Directorate. 

• Keep detailed records of the exempted items. 

• Preferably hire Nicaraguan personnel for the execution of the projects, except for specialized experts and technicians. 

• Present a guarantee or surety bond in favor of INTUR. 

Compliance bond 

One of the main conditions established in the regulation is the requirement to present a compliance bond, which serves as a guarantee that the investor will carry out the project as approved by the Tourism Incentives Committee. 

The compliance bond must be equivalent to 0.6% of the total project investment. This percentage ensures that investment commitments and project execution timelines are respected. 

The bond amount will be reviewed if there are any extensions in deadlines or increases in investment, adjusting proportionally. In case of failure to comply with the Investment Plan, INTUR will issue an administrative resolution to begin the process of executing the bond. 

Bryan Mendieta 
bryan.mendieta@garciabodan.com
Associate
García & Bodán
Nicaragua