Nicaragua approved Law No. 1264, the Law on Special Economic Zones of the Belt and Road, published in La Gaceta, the Official Gazette on October 31, 2025, which entered into force upon its publication.
This legislation creates a new legal framework offering broad fiscal, customs, and administrative incentives to promote both domestic and foreign investment, regional development, and the creation of formal employment.
A new incentive regime
The Law establishes the Special Economic Zones of the Belt and Road (SEZs) as designated areas within the national territory dedicated to processing, transformation, and value-added activities aimed at the export of goods and services.
Its main objective is to foster productive diversification, technology transfer, and national competitiveness within a framework of legal certainty and environmental sustainability.
Among the key fiscal benefits granted to companies operating within the SEZs are:
- Full exemption from Income Tax and Dividend Tax for ten years, renewable indefinitely every period, subject to compliance with national regulations.
- Exemption from import duties, customs tariffs, and consumption taxes on goods and services necessary for operations.
- Exemption from VAT on local purchases and imports related to their activities.
- Exemption from municipal taxes, property transfer taxes, and indirect or selective consumption taxes.
These incentives do not apply to income taxes on wages paid to national or foreign employees.
Administrative benefits
Companies operating under the SEZ regime will have access to a one-stop service window for all import, export, and administrative procedures, in addition to:
- Simplified procedures in environmental, tax, labor, and migration matters.
- Preferential energy and leasing rates.
- Access to workforce training programs.
- Port, airport, and border facilities to streamline foreign trade operations.
Requirements to operate
Only national or foreign companies dedicated to the export of goods and services with added value may establish operations within SEZs.
Such companies must be incorporated as Nicaraguan commercial entities with the exclusive purpose of producing goods and services for export. Foreign firms may operate through subsidiaries, consortia, or branches, in accordance with the Commercial Code.
Administration and dispute resolution
The administration of the regime will be under the responsibility of the National Commission of Free Zones, while the policy direction will fall under a Special Commission composed of senior government representatives.
In the event of disputes, differences with foreign investors will be resolved pursuant to Law No. 1240, the Foreign Investment Law, ensuring a legal framework that guarantees investment protection and legal certainty.
