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Business Opportunities: Nicaragua
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Background | Global Expansion | Set Up Business
Background
According to a September 2006 report from World Bank, Nicaragua is now the country with the best conditions for business and attracting foreign investments in Central America. The World Bank's international ranking placed Nicaragua at number 67 among the 175 evaluated countries. A high ranking is indicative of a favorable regulatory environment that's conducive to the operation of business. Additional factors exclusive to Nicaragua include a reduced property transfer tax from 4% to 1% of the value of the property and improved conditions for obtaining credit and trading across borders.
As a result of years of economic liberalization, and the implementation of policies intended to stimulate national and foreign investment, Nicaragua is now one of the most dynamic economies in Central America, due in large part to a substantial increase in private investment and exports.
According to ProNicaragua.org, in 2006 Nicaragua increased its Foreign Direct Investment inflows by more than 18% to $282 million and grew its total exports by over 27%. A report by International Development Systems Inc. (IDS) revealed that Nicaragua was second only to China in terms of growth in garment exports to the United States in 2006. Overall, exports from this sector have increased by almost 44% between 2004 and late 2006.
Nicaragua has always been primarily an agricultural country, but construction, mining, fisheries, and general commerce also have been expanding during the last few years, as well as the tourism industry. International visitors to Nicaragua reached nearly 900,000 for 2006, with tourist spending reaching $230.6 million, a 25% increase from 2005. Tourism is currently growing at 19% annually and is contributing more than any other single industry in Nicaragua's $5 billion economy. By 2007, it is projected that more than one million visitors will arrive in Nicaragua.
Global Expansion
Foreign investment in Nicaragua is promoted by the government as well as private institutions. It is also protected by way of a law known as the "Foreign Investment Protection Law." It guarantees complete convertibility of Cordobas (Nicaraguan currency) into dollars with no special taxes or levies and with no requirements or permissions.
There are several areas in Nicaragua that are promoted by the government, the most important of which are the Industrial Free Zones and Tourism.
There are several industrial parks in Nicaragua where you can either build your business or rent the space. This becomes a tax exempted area—like a free zone for exports. The government offers many incentives. Many different types of industries can take advantage of the low cost of labor and the no-tax promotional law, and they can establish their business in these industrial parks producing everything from apparel to fuel tanks.
Tourism continues to grow and has fueled a booming real estate business in Nicaragua, which is forecasted to continue anywhere from seven to ten years. Anything that is considered part of the tourism business, or designed to promote tourism to the country, can benefit from incentives provided by Law 306. This law provides potential businesses an exemption from 15% sales tax, which covers such items as the purchase of construction materials and equipment to develop your business plus any related property taxes, for ten years.
Set Up Your Business
Law 306 incentives extend into a variety of business types that are eligible for tax exemptions. For example, investing in environmentally protected areas, arts and crafts, transportation (land, water or air), or investment in infrastructure such as marinas, energy
production, waste disposal treatment, and other such options, particularly hotels, bed and breakfasts, lodges, condos, etc. are also covered under this tax code.
What you need to know!
While the Nicaraguan economy continues to grow and several foreign businesses have taken advantage of the lucrative benefits offered by the government, starting a business there seems simple enough on paper, but rules can change laws may vary in different locations. You need a local lawyer and consultant to work through often complex procedural matters, the least of which may involve waves of paperwork and translation assistance. Depending on whether your business proposal is small or large scale, permissible or otherwise, there are numerous resources you must align yourself with in order to succeed. Learn more...
Our Services
- Formulation and project evaluation in the industrial, commercial and tourism sectors
- Consultantships in discharges and fiscal matters
- Market research
- Process of inscription and formation of societies in accordance with Nicaraguan law
- Accounting and financial consulting
- Investigation of economic indicators
- Facilitating contact with the private sector and government
Contact Us
The opportunities in Nicaragua are limitless. Whether you'd like to run your own B&B, offer local tourist services, start a fishing charter, your own cafe or cantina, Nicaragua is a great choice. Besides the lucrative tax saving advantages, there is great demand for foreign business entry to serve the local and flourishing international markets alike, and further economic growth and stability. We can help you get started. Nicaragua is one of our primary areas of focus. Between our growing local team and network of professionals, we can assist you to establish or extend your business operations and guide you through the entry process.
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