NICARAGUA INVESTMENT INCENTIVES

Nicaragua has passed a number of laws and incentives to attract foreign investment and it has worked. The GDP growth in 2004 surpassed expectations at 5.2%. This was higher than Costa Rica, Brazil, or Mexico. These laws are many and varied, ranging from total tax exoneration for tourism related business (Law 306), free-trade zones for manufacturing companies, to retirement benefits for foreigners.

These laws have been complemented by programs which have cut the bureaucracy involved to start corporations (now a 45 day process maximum). Outright property ownership for foreigners can be obtained with just a valid passport.

NICARAGUA LAW 306 (Tourism Incentive Law)

The Tourism Incentives Law, which grants special incentives to the tourist-oriented industry allows:

* 80% to 100% income tax exemption, depending on the type of activity.
* Total property tax exemption for a period of 10 years.
* Sales tax exemption on building design and supervision contracts.
* Import and sales tax exemption for 10 years on design and construction materials and equipment.
* Import and sales tax exemption for 10 years on furniture, equipment, vehicles, and accessories.

NICARAGUA FREE-TRADE ZONES

Textile, apparel and other manufacturing companies, whether located inside a free zone or as a stand-alone operation (called a ZOFA), may apply for incentives under the Free Zone Law. The law grants qualifying companies the following tax benefits:

* 100% income tax exemption
* 100% value added tax exemption
* 100% municipal tax exemption
* No taxes on capital gains
* Duty free import of machinery and equipment, raw material and intermediate goods
* Duty free import of transportation equipment and vehicles.
* Minimal registration procedures
* No limits on foreign capital
* Full currency convertibility
* No double taxation

Nicaragua Retirement Incentives

Nicaragua has recently passed legislation to encourage retirees and pensioners to move here. Decree No. 628, the "Law of Resident Pensioners and Retirees" states that you are eligible for benefits if you are over 45 years of age and have a monthly income of at least $400 (include an additional $100 for each dependent family member that will live with you in Nicaragua).

Decree No. 628 gives benefits mostly in the form of tax incentives and entitles the retirees to the following:

1. Pay no taxes on any out-of-country earnings.
2. Bring up to $10,000 worth of household goods for your own home, duty-free.
3. Import one car for personal or general use and pay no import tax or protective tariff, and after 5 years you can sell it, again exempt from consumer sales tax.
4. Import an additional vehicle every 5 years under the same tax exemptions.

There is paperwork that goes along with applying for retiree status in Nicaragua. Here is a list of the necessary documents.

* A copy of your birth certificate
* A copy of your passport
* A certificate of letter from your doctor stating that you are in good physical health, are free from communicable diseases and are mentally sound
* A letter from your local police department stating that you have never been convicted of any crime
* A certificate of income from your bank or pension plan affirming that you will have enough money to meet the minimum requirement of $400 a month
* A list of the household items that you will be importing

These documents must all be translated into Spanish by a lawyer and notarized.

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