Nicaragua: Incentives for Oil Investments

By approving the changes to the Special Law for Exploration and Exploitation of Hydrocarbons, the country's oil sector contractors are exonerated from all taxes.

Monday, December 16, 2019

The amendments stipulate that transfers of agreed contracts shall not pay taxes during the exploration period, and the direct or indirect assignment or transfer of all or part of the rights derived under any modality for the activity of exploration and exploitation of hydrocarbons shall be exempt from any capital gains tax.

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From the National Assembly statement:

The deputies of the National Assembly approved today, Saturday December 14, the "Law of Reforms and Additions to the Special Law of Exploration and Exploitation of Hydrocarbons" that grants fiscal incentives for the development of the oil industry in the country.

Congressman Edwin Castro, head of the Sandinista Caucus, stated that this law will speed up the exploration and exploitation of oil or natural gas, given the good news provided by the company Equinor that the studies gave positive results in the pacific of Nicaragua of this finding.

"It is possible that by 2021 will be drilling the first exploration wells with a very high probability of finding at least natural gas in our territorial sea what would be a work of economic development for all Nicaraguans of gigantic dimensions so this law what it brings is to accelerate that this company can do the exploration of the case and in the coming years we are exploiting natural gas and why not even oil," he said.

On the other hand, Congresswoman Josefina Roa, acting president of the Infrastructure and Public Services Commission, highlighted that hydrocarbon exploration and exploitation is considered of national interest because of its great potential for Nicaragua's economic and social development.

She added that it is the duty of the State to watch over the permanence of the investments, that is why it is opportune the reform of this law that has as objective to establish fiscal incentives in the period of oil exploration for the development in Nicaragua of a new industrial activity.

Therefore, said that this exploratory stage should be exempt from any tax burden so that companies have the facility to develop exploration which will lower investment costs which are high by the equipment and place where it takes place.

"With the approval of this reform we are giving hope to the people of Nicaragua, that the possibility of being in the Sandino Basin natural gas or oil deposits would strengthen us economically, eradicating poverty and developing more social projects for the benefit of our people," said Congresswoman Roa.

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