flag Nicaragua Nicaragua: Investing

FDI in Figures

According to the UNCTAD's 2021 World Investment Report, FDI flows to Nicaragua accounted for USD 182 million in 2020, a significant drop from USD 503 million in 2019, mainly as a result of the economic and health crisis triggered by the Covid-19 pandemic. The stock of FDI was estimated at USD 9.4 billion in 2020. The energy, infrastructure and tourism sectors attract most FDI. The United States, Mexico and Spain are the country's main investors.

Nicaragua ranked 142nd out of 190 countries in the last Doing Business report, published by the World Bank in 2020, which indicates a ten-spot drop compared to the previous year. The government measures the importance of foreign investment in Nicaragua, and the dependancy of the economic growth from the FDI. For that reason, in recent years, the government has passed a number of laws to attract and protect foreigners investing in the country. Some of these laws include the Tourism Industry Incentives Law, and the Foreign Investment Promotion Law. Among other things, the Foreign Investment Promotion Law allows foreign investors in all sectors to hold 100% of capital in businesses, and guarantees repatriation of capital and profits at any time as well as fast and efficient compensations if the investor's property is expropriated on the grounds of public interest. The same law also allows investors to choose their arbitration court in case of conflict and guarantees no discriminatory treatment for foreigners investing in Nicaragua. The establishment of free zones has strongly supported FDI growth in the country. However, Nicaragua faces many challenges: weak institutions, an inefficient judicial system and bureaucratic obstacles. As for current investment projects, a master plan between El Salvador, Honduras and Nicaragua for the Fonseca Gulf was presented in 2019; it includes ferries between key cities as well as implementation of a logistics park, a free trade zone and a sustainable tourism hub.

 

Country Comparison For the Protection of Investors

  Nicaragua Latin America & Caribbean United States Germany
Index of Transaction Transparency* 1.0 4.1 7.0 5.0
Index of Manager’s Responsibility** 5.0 5.2 9.0 5.0
Index of Shareholders’ Power*** 6.0 6.7 9.0 5.0

Source: Doing Business - Latest available data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.

 
Foreign Direct Investment 201920202021
FDI Inward Flow (million USD) 5037471,220
FDI Stock (million USD) 9,239.59,986.011,206.1
Number of Greenfield Investments* 8.02.03.0
Value of Greenfield Investments (million USD) 66129573

Source: UNCTAD - Latest available data

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

 

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Tax Rates

Value-added tax (VAT) - Impuesto al Valor Agregado (Local name)
15% (standard rate)
Exports are zero-rated.
Exempt items include live animals and fresh fish; domestically produced fruits and vegetables that are unprocessed; basic foodstuffs, such as corn tortillas, rice, beans, certain dairy products, eggs and meat; used goods (unless imported); crude oil; real estate transactions; life and health insurance; domestic transport; education; certain financial services; construction of social housing (as defined by law) and leasing of unfurnished accommodation; equipment used for agriculture; irrigation for agriculture and forestry; electricity used for irrigation; importation of goods, machinery and equipment for use by the media; books, newspapers and magazines; medicines and vaccines; local production of sanitary protection products and toilet paper; matches, kerosene, butane and electricity; veterinary products; insecticides, fungicides, fertilizers and seeds.
Company Tax
30% (or a definitive minimum tax of 1% to 3% on gross income obtained during a fiscal year)
Withholding Taxes
Dividends: 15% (30% if paid to a resident of a tax haven); Interests: 15% (30% if paid to a resident of a tax haven); Royalties: 15% (30% if paid to a resident of a tax haven).
Social Security Contributions Paid By Employers
21.5% (22.5% for employers with more than 50 employees).
Other Domestic Resources
Dirección General de Ingresos
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 
 

Individual Taxes

Individual income tax Progressive rate up to 30%
Until NIO 100,000 0%
From NIO 100,001 to 200,000 15%
From NIO 200,001 to 350,000 20%
From NIO 350,001 to 500,000 25%
Over NIO 500,001 30%
 
 

Country Comparison For Corporate Taxation

  Nicaragua Latin America & Caribbean United States Germany
Number of Payments of Taxes per Year 43.0 28.2 10.6 9.0
Time Taken For Administrative Formalities (Hours) 201.0 327.5 175.0 218.0
Total Share of Taxes (% of Profit) 60.6 46.8 36.6 48.8

Source: Doing Business - Latest available data.

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Investment Opportunities

Tenders, Projects and Public Procurement
Inter-American Development Bank, Tenders in South America
DgMarket, Tenders Worldwide
Setting Up a Company
Consult Doing Business Website, to know about procedures to start a Business in Nicaragua.
Useful Resources
Nicaragua Investment Agency
 

Business Setup Procedures

Setting Up a Company Nicaragua Latin America & Caribbean
Procedures (number) 7.00 8.00
Time (days) 14.00 25.22

Source: Doing Business.

 
 
 

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Latest Update: September 2022