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Latin America Investment News on Viva Tropical

The One Thing Nicaragua Did Right for Tourism

Article Summary:

The reduction to $25,000 on the minimum amount of investment required to enjoy tax exemptions in Nicaragua opens up big opportunities for those interested in investing in the nation’s ever-expanding tourism sector.

Photo Credit: La Prensa Nicaragua

Original Article Text From La Prensa Nicaragua via google translate:

SMEs, the “sleeping giant” of Tourism

Until Dec. 31, small and medium enterprises (SMEs) duly registered tourist had to invest at least $ 50,000 to receive tax benefits. From the first of January this year, with the entry into force of the Law on Tax Coalition (LTC, Act 822), the minimum investment was reduced to $ 25,000, which is expected to invigorate the sector.

This decrease was the result of at least four years of requests and proposals from small businesses to amend Act 306, Act Incentives for Tourism Industry, because they were excluded from its benefits. However, the initial proposal was reduced to five thousand dollars minimum investment for micro also receive incentives.

Gilberto Alcócer, director of the Nicaraguan Council of Small and Medium Enterprises (Conimipyme), explains that once started the consultation process for the proposed LCT reform Law 306 strata classifying investment amounts depending on the size of Company: calling down to five thousand dollars minimum investment departments and 10,000 in Managua for micro, $ 10,000 in departments and 15,000 in Managua for small businesses and 20 000 in the departments and $ 30,000 in Managua for midsize companies.

“We raised the difficulty at this time to make an application as to detail, especially for micro, because it is so fragmented and disorganized. Do not have the organizational capacity or control or registration so that they can meet at this time that way, “says Alcocer. That is why employers agreed to reduce the minimum investment incentives to access $ 25,000 in departments and 50,000 in Managua.

“We saw it really reasonable for a small business to work in tourism, put a disco or a restaurant, they really are the amounts necessary to make an investment in the tourism sector,” he adds, but does not rule out the idea that “over time” can double check those amounts.

Interested in the quality
But what about the micro? These remain outside the tax incentives for tourism investment. Alcócer admits it, but says that one of the reasons why that way was reformed Law 306 was to encourage investment in quality. “It has been growing quality tourist, if we promote and encourage an investment that does not have quality, we can be tourists,” he warns.

This reform is expected that “to the extent you have investment quality, that quality can go bathing to micro and small businesses and can add up to that quality? to the extent that happens then we can review the mechanism of how they will see benefit from the tax reform. ”

Deyanira Mairena, executive director of the Association of Owners of Small Hotels (Hopen), agrees that the new benefit amounts could hardly reach the micro tourist whose annual investments range between 2,000 and 10,000 in the hotel sector.

Mairena also says another challenge is to advance the formalization of the sector of micro, small and medium tourism enterprises, to remember that these tax benefits will come only to those who are registered, ie formal.


The new tourism investment minimums to enjoy tax incentives are raising a cloud of excitement among small tourism entrepreneurs who hope to collect the medium and long term benefits of this new condition, with improvements mainly in the infrastructure business.

The director of the National Chamber of Tourism (Canatur), Sergio Arguello, estimates that in the coming years, investment in tourism SME sector could grow between 5 and 10 percent, but admitted that it will depend on several factors, for example, the diffusion of that tax benefit from business owners, because many are unaware of the content of the Law 306.

“Many people do not know that there is a law, business owners are making the investment and then when they go to Intur (National Institute of Tourism) and have paid all taxes,” said Arguello.

But the sector will struggle not only with the gap of ignorance that exists in the Act, shall also comply with the paperwork required to get to enjoy these tax benefits. Argüello and president of Hopen, Sandra Mejia, agree that this will be one of the biggest challenges facing the sector in terms of incentives.

It is true that reducing the minimum necessary, supports Canatur steering, but the real need believes, is “simplify procedures.” “They demand studies, will require a lot of things. Perhaps what is needed is to design a manual or a way for the Intur benefit directly to the business owner, “he emphasizes.

Argüello explains that currently have to go to the Board of Incentives and once it approves the investment project, the exemptions should apply a priori, “this is an additional cost for tourism SMEs.”

Mejia acknowledges that getting the benefits is not simple, but still say they have lowered the share of investment is a great achievement. “It is an encouragement to the industry and now we will press for simplifying these procedures,” he says.

According Conimipyme calculations, the effects of this reform will have a “ripening period” of about two years and could be seen up to five years.

“After five years we estimate that employment generation is mainly at least ten percent in relation to what is generated in the sector today. Every year could be about two thousand, three thousand new jobs. Moreover, we estimate that the increase in quality tourism each year could add up to ten per cent annually, “envisions Alcócer.

Mairena, Hopen executive directors, explains that the purpose of the Act, which will feel the medium term, will be evident in the expansion of rooms, purchase of equipment for use by the industry and others.

Stresses the need for further reform to the Act which are assigned a quota to micro tourism. But for now the industry celebrated what he achieved with the reform of Law 306 made the LCT.

Link to Original Article:

From La Prensa Nicaragua

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