Free Zone Regime in Nicaragua
At CAFTA region level, Nicaragua ranks third as the country with the highest volume of exports of textiles and clothing.
Nicaragua, through Law No. 917 “Export Processing Zones Law”, offers important fiscal incentives to companies that wish to be constituted under the free zone regime that are interested in establishing export-oriented operations in the textile and apparel, manufacturing and agro-industry industries.
These benefits are not only granted for the textile, manufacturing and agro-industry industries, but also, through the Law, are granted to all export activities of international services under the free trade zones regime, such as Business Process Outsourcing (BPO), Knowledge Process Outsourcing (KPO), Information Technology Services (ITO), among others.
Some of the benefits offered are as follows:
- Exemption of 100% of the payment of the income tax generated by its activities in the Zone during the first 10 years of operation. Exemption that may be extended for an additional period of 10 years, with prior authorization.
- Exemption from the payment of taxes on the alienation of real estate at any title, including the Capital Gains Tax.
- Exemption from payment of Taxes for Constitution, transformation, merger and reform of the society, as well as Stamp Tax.
- Exemption from all taxes and customs and consumption duties related to imports, applicable to the introduction into the country of raw materials, materials, equipment, machinery, matrices, parts or spare parts, samples, molds and accessories intended to enable the company to operate in the area.
It is important to point out that the free trade zones, as a mechanism of economic modernization, have a direct impact on the country’s economic growth. Consequently, they constitute a valuable element for competitiveness and the promotion of the economy and the creation of employment, as well as technology transfer.
Valeska Fonseca Torrez
Associate
García & Bodán
Nicaragua