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.
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.
Until 2023 renewable energy projects in Nicaragua may opt for the exemption of import duty on machinery and equipment, VAT, income tax and municipal taxes.
The National Assembly approved a reform proposed by the Ortega administration to extend the term of tax benefits for energy generation projects with renewable sources.The law established that the maximum period to opt for exemptions was January 2018, but now they will remain in place until January 2023.
In Nicaragua, the Ortega administration is proposing to extend tax benefits for energy generation projects using renewable sources for another five years.
Continuing with the strategy of promoting energy generated from renewable sources, the government is proposing extending tax incentives for these types of projects, as it did in June 2015.At that time, the benefits were extended until January 2018.
The law reform approved by the National Assembly raises from $32 thousand to $40 thousand the cap to receive a subsidy for social interest housing and up to $50 thousand for housing in condominiums and apartments.
With the reforms, the ceiling for receiving the subsidy for social interest housing is increased from $32 thousand to $40 thousand for a single family dwelling and up to $50 thousand for multifamily housing, the latter is a new feature of this initiative, specifically for condominiums and apartments.
According to the ICEFI, "tax incentive policies seem to be a lost opportunity because of permanent tax expenses and the lack of tangible social benefits."
From a statement issued by the ICEFI:
Within the framework of the international meeting on Tax Justice and Transnational Fraud, held in Costa Rica, a study was presented on October 20 entitled 'The effectiveness of taxincentives for investment in Central America' in which an analysis was undertaken of the Central American experience in investment attraction through tax incentives.
The bill submitted by the Executive aims to increase legal certainty and transparency of processes through improved tender mechanisms.
The Executive presented a bill for public and private investment classified as urgent, only days after the US Congress passed a law whichputs conditions on loans from international institutionsto the government of Daniel Ortega.
From 2014 to 2015 the size of central governments remained constant at an average 18.5% of gross domestic product (GDP).
From the introduction of the report: "Macrofiscal Profiles: 6th Edition" by the Central American Institute for Fiscal Studies (Icefi):
2015 proved to be a period of low tax advance for the Central American region. On average, the size of central governments remained constant compared to 2014, at 18.5% of gross domestic product (GDP). However, not all nations maintained this trend in the same way. While the governments of Nicaragua, Costa Rica and El Salvador, some of the largest fiscally in the region, continued to increase their participation in the economy, reporting increases of 1.5, 0.7 and 0.7% of GDP, respectively, the Government of Guatemala - one of the smallest in the world became even smaller, being reduced by 1.2% of GDP. For its part, the Government of Honduras reported a small decrease of 0.2% of GDP, fully converged with its policy of fiscal austerity, while that of Panama had a transient contraction of 1.4%, reflecting a reorganization established by the new administration and that, according to the plans for 2016, will be reversed in full.
The Livestock union has agreed with the government flexibilities in terms of deadlines, prices, and free export of descarded male and female livestock.
From a statement issued by the Federation of Livestock Associations of Nicaragua (FAGANIC):
The 50 companies already operating at Tocumen's airport facilities will be able to access free trade zone incentives if the request made by the administration of the terminal is approved.
The documentation was submitted to the National Commission of Free Zones at the Ministry of Trade and Industry (MITI), and there will be a 30 day period to review and approve the application. In the documents the administration of Tocumen SA cited as justification for the application logistics companies established at the airport and in the increase in the volume of cargo passing through the terminal.
Growth of 9% per year is part of the rewards brought about by incentives for the sector and the opening up of government by working in partnership with private enterprise.
Incentives for tourism have been vital to the creation of new projects in this sector.
173 companies operating in 48 industrial parks using the free zone format, in three years increased the total number of square meters used by 33%.
An estimated $300 million has been invested between January and November 2015 by companies operating under the free zone incentive scheme, which are focused on the textile industry mainly in the manufacture of harnesses, production of tobacco and more recently, services such as call centers.
Efforts are growing to minimize the impact of the possible signing of the Trans-Pacific Partnership Agreement, and a tariff reduction program with long deadlines for sensitive products has been proposed.
As negotiations proceed to sign the Trans-Pacific Partnership Agreement (TPP), the textile industry in El Salvador is stepping up its efforts to maintain the conditions of the CAFTA treaty and minimize the impact that the TPP will have on the sector in the long term. One of the main risks is that "... Vietnam could introduce products from China and then export them tariff-free to the United States, which would give them a huge competitive advantage. "
As a measure to discourage smuggling, the taxable limit for withholding income tax on the export of live cattle has been reduced.
The Federation of Livestock Associations of Nicaragua (Faganic) welcomed the decision to reduce the limit for incurring income tax, believing that it will be an incentive to reduce smuggling of cattle and allowing more to be exported through the formal market.
Employers claim that at least six projects have been delayed pending analysis by the Board of Tourism Incentives, which has not been in session since the departure of its president two months ago.
There are at least six investment projects in the tourism sector that should have been analyzed by the Board of TourismIncentives, which, drowning in bureaucracy, is unable to hold sesion because a new president has not been formally chosen.
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