by Penny Hurlbuck
As part of Nicaragua’s ongoing efforts to make tourism a cornerstone of the national economy, a new tax incentive driven tourism investment bill will be presented to the national legislature in the fall session. Patterned on tax incentive financing (TIF) laws common in the United States, the bill allows investors to finance 70% of tourism-based projects by the sale of bonds which are in turn repaid over time by money that would otherwise have been paid to the government as taxes. The other 30% must be funded by the project investor. The new law is called the Tourism Investment Bond program (BIT).
The bill specifies the use of undeveloped land which now has no existing infrastructure and therefore no tax base. The diverted tax money would be the 15% central government IGV sales tax and Rental Tax (IR); applicable local taxes would still be paid.
