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Nicaragua FTZ & Investment Incentives Guide 2026

Nicaragua offers significant tax incentives through its Free Trade Zones (FTZ) regime. FTZ operators receive a 100% income tax exemption for 15 years, and FTZ users receive 100% exemption for 10 years, followed by a 60% exemption from year 11 onward. Additional benefits include duty-free imports, VAT exemption, and municipal tax exemption. Tourism incentive programmes provide tax benefits for up to 10 years. These incentives are designed to attract foreign investment and promote economic development.

Overview — Investment Incentives in Nicaragua

Nicaragua's investment incentive framework is governed by the Free Trade Zone Law (Ley de Zonas Francas) and the Tourism Incentives Law. The Free Trade Zone regime offers substantial tax benefits for qualifying companies engaged in manufacturing, processing, assembly, and export-oriented services. The regime is administered by the Ministry of Development, Industry and Commerce (MIFIC) and the DGI. Nicaragua has a territorial tax system and offers various additional incentives for strategic investments.

Free Trade Zones (FTZ) — Income Tax Exemption

The FTZ regime provides significant income tax exemptions for qualifying businesses:

  • FTZ operators: 100% income tax exemption for 15 years
  • FTZ users (manufacturing/processing): 100% income tax exemption for 10 years, then 60% exemption from year 11 onward
  • FTZ users (services): Varying exemption periods based on the nature of services

To qualify, the company must be established in a designated FTZ or operate as a free trade zone user under the FTZ law. The company must be primarily engaged in export-oriented activities or services.

Additional FTZ Benefits

FTZ operators and users also receive the following benefits:

  • Duty-free imports: Exemption from customs duties on machinery, equipment, raw materials, and supplies imported for FTZ operations
  • VAT exemption: Exemption from IVA on imports and domestic purchases of goods and services for FTZ operations
  • Municipal tax exemption: Exemption from municipal taxes and fees for the duration of the FTZ permit
  • Stamp tax exemption: Exemption from stamp taxes on FTZ-related documents

Tourism Incentives

Nicaragua offers tax incentives for tourism projects under the Tourism Incentives Law, including:

  • Income tax exemption: Up to 10 years of income tax exemption for qualifying tourism projects
  • Duty-free imports: Exemption from customs duties on imported goods for tourism projects
  • VAT exemption: Exemption from IVA on construction materials and equipment

Qualifying projects include hotels, resorts, eco-tourism developments, and tourism infrastructure projects. The tourism incentives are administered by the Nicaraguan Tourism Institute (INTUR).

Qualifying Sectors

Priority sectors that may qualify for FTZ or other incentives include:

  • Manufacturing: Textiles, apparel, electronics, automotive parts, food processing
  • Assembly operations: Maquila and assembly for export
  • Agriculture: Agro-processing and agricultural exports
  • Tourism: Hotels, resorts, eco-tourism
  • Services: Call centres, BPO, software development, logistics
  • Infrastructure: Energy generation, telecommunications

Application Process

The process for obtaining FTZ status or tourism incentives:

  • Submit application: File with MIFIC (for FTZ) or INTUR (for tourism) with project details
  • Review: The relevant ministry reviews the project for eligibility and economic impact
  • Approval: Issuance of FTZ permit or tourism incentive certificate
  • Registration: Register for tax incentives with DGI
  • Compliance: Ongoing reporting and compliance with permit conditions

FAQs

What is the minimum investment for FTZ status?

Minimum investment thresholds vary by sector and are determined by MIFIC. Generally, a minimum investment amount and job creation targets must be met.

Can a service business qualify as an FTZ user?

Yes, certain service sectors including call centres, BPO, software development, and logistics may qualify as FTZ service users.

Can foreign investors own 100% of an FTZ company?

Yes, Nicaragua permits 100% foreign ownership of FTZ companies in most sectors.

What happens if an FTZ company fails to meet its conditions?

Failure to meet FTZ conditions may result in revocation of FTZ status and clawback of tax incentives received, plus penalties.

Disclaimer

This guide provides general information about Nicaraguan FTZ and investment incentives for the 2026 tax year. Incentive programmes and eligibility criteria may change. Always consult with a qualified Nicaraguan investment advisor or the Ministry of Development, Industry and Commerce for advice specific to your situation. InvestmentKit does not provide investment advice.