Tax relief for free zones: The regime offers "eternal" exemptions to try to stop companies from fleeing
The regime orders reforms to the Free Zones and Tax Concertation laws to retain investments with tax benefits of up to 15 years and indefinite exemptions, while imposing import controls and reviewing basic basket taxes.
TL;DR
- Nicaragua's government proposes significant tax reforms targeting free zones to combat industry contraction.
- Reforms extend tax exemptions for free zone operators, offering up to 15 years of 100% Income Tax (IR) and dividend tax exemption, with possibilities for extensions.
- User companies will receive 100% exemption for 10 years, followed by an indefinite 60% exemption.
- A new law requires written certification that imported/exported goods are not made with forced labor, with potential for supply chain audits and criminal investigations.
- Reforms to the Tax Concertation Law include eliminating special payment regimes for casinos and removing the 30% retention on expenses in tax havens.
- The public administration may review the list of VAT-exempt goods, including basic necessities, medicines, and school supplies.
- Mining sector rules are tightened, with extraction royalties no longer deductible for IR calculation.
- The expected outcome is to guarantee foreign investment through aggressive incentives and strengthen tax collection.