Amends Export Free Trade Zone Law to allow indefinite renewals of tax benefits
09 Apr 2026
OOn 9 April 2026, Nicaragua’s Law No. 1278 entered into force, amending Law No. 917 (Export Free Trade Zone Law) to allow successive renewals of certain free-zone tax incentives. The 100 per cent exemption from income tax on economic activities and tax on dividends is granted for 15 years for free-zone operators and 10 years for user companies and may be renewed successively for equal periods, subject to authorization by the National Free Trade Zone Commission and compliance with conditions to be established in the regulations. Under the previous regime, the corresponding income tax exemption could be renewed only once.
The exemption from tax on dividends covers dividends obtained by free-zone operators and user companies and their shareholders from operations under the free-zone regime. For user companies, the exemption does not cover taxes on personal income, wages, salaries or other remuneration paid to employees. Other fiscal benefits granted to operators and user companies under the law are indefinite.
Upon expiry of the applicable exemption period and any renewals, operators are required to pay 100 per cent of the applicable income tax on economic activities and tax on dividends. User companies are required to pay 40 per cent of those taxes until they cease operations in the country.
Nature of measure:
Type:
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Promotion and facilitation (Investment incentives, Special economic zones)
Industry:
Inward FDI:
Yes
Outward FDI:
No
Sources:
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La Gaceta, Diario Oficial, LEY Nº. 1278 LEY DE REFORMAS Y ADICIONES A LA LEY Nº. 917, LEY DE ZONAS FRANCAS DE EXPORTACIÓN, https://www.lagaceta.gob.ni/la-gaceta-no-61-jueves-09-de-abril-de-2026/, 09 Apr 2026
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Lexology, Tax Reforms Impact Free Trade Zones, ISC, and Foreign Trade in Nicaragua, https://www.lexology.com/library/detail.aspx?g=1202591b-8fb8-4bb0-86b3-eb9d92ec92eb, 15 Apr 2026
