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Nicaragua offers a variety of favourable tax incentives for geothermal development

Plant in San Jacinto Tizate, Nicaragua (source: PowerEngineers)
Alexander Richter Alexander Richter 3 Mar 2017

The country of Nicaragua in Central America is offering a variety of tax incentives for geothermal developers, including exoneration on customs duties and VAT, as well as exoneration of certain income taxes.

In a recent article by a lawyer from Nicaragua, an overview is given on the tax incentives for geothermal project development In Nicaragua.

The country offers attractive tax incentives based on Act 443, “Law on the Exploration and Exploitation of Geothermal Resources” and any amendments thereto, published on November 17, 2014.

The tax incentives available, include – so the article – the following:

  • Exoneration of customs duties and VAT on machinery, equipment, and materials for works construction.
  • Exoneration of the payment of income tax for a 10-year period following the commencement of the project’s commercial operations.
  • Exoneration of payment of municipal income tax (IMI) for a 5-year period following commencement of the project’s operations.

The article also describes legal requirements involving the state-owned national energy company ENEL (Empresa Nicaragüense de Electricidad).

According to regulation described, ENEL should own at least a 10% equity interest in geothermal exploitation project and additional must have a seat at the Board of Directors of the company that has been granted an exploitation concession. Furthermore, the rest of the equity interest must be owned by an entity (domestic or foreign) “for up to a 30-year exploitation concession period following the execution of the exploitation agreement.

For further details see the article accessible via the link below.

Source:  Fidel Sánchez, BLP Attorney via BLP Legal