On February 24th, 2025, the Nicaraguan government published Law No. 1240, known as the 'Foreign Investment Law' in La Gaceta No. 36. This regulation establishes legal provisions for the promotion, encouragement, facilitation, formalization, monitoring, and management of foreign investments in the country. This law came into effect May 24, 90 days after its publication in La Gaceta. 

What does the law include? 

The legal framework of this law encompasses many aspects that companies established in Nicaragua should consider. Firstly, it establishes the process for registering all foreign investments operating in the country, filing on the Investment Directorate of the Ministry of Development, Industry and Commerce (MIFIC). 

Consequently, institutions grant foreign investors the following: tax benefits, such as tax exemptions and tariff reductions, as well as access to other sectoral incentives. It also guarantees fundamental rights. These include the use and enjoyment of property, free access to foreign currency, capital and profit transfers, and protection against non-commercial risks under international treaties.  

Additionally, criteria for investments categorized as strategic are defined, ensuring their alignment with national development objectives. 

The document establishes the need to regulate the criteria for evaluating Strategic Investments through a decree that sets the regulatory framework for its effective application. 

Main supervisor organizations 

The National Commission for Foreign Investment (CNIE) is the governing body on foreign investment matters, responsible for its organization and operation. 

The Technical Committee for the Evaluation and Monitoring of Strategic Investments (CTESIE) is a specialized inter-institutional body under the CNIE, responsible for evaluating and monitoring strategic investments. 

Impact on economy 

The law aims to attract foreign capital by creating a favorable investment environment through simplified procedures and guaranteed legal protection. Furthermore, by attracting investments in various sectors, it contributes to the economic diversification of Nicaragua, reducing reliance on a few industries. 

The law promotes investment in strategic sectors such as renewable energy, tourism, infrastructure, and free trade zones. It also provides a solid and stable legal framework for investors, generating confidence and security in their operations. 

Therefore, the reform is expected to contribute to Nicaragua's economic growth, driving development and improving the well-being of families. 

Conclusion

The Foreign Investment Law should serve as an opportunity to boost Nicaragua's economic growth. The effort is designed to increase foreign investment in the country through mechanisms that facilitate the creation, regulation, and implementation of new projects. 

As Nicaragua progresses in its implementation, it will be possible to evaluate its impact and adjust as needed to foster a favorable and attractive environment for investors. 

The growing Central American market is increasingly attracting foreign investment. If you are interested in expanding your multinational company or investment fund into the country or region, do not hesitate to contact us for efficient and transparent management of your accounting, tax, payroll, and corporate legal needs in Nicaragua or in over 50 other jurisdictions. 

We invite you to contact us via our form for a personalized consultation. 

At Auxadi, we offer comprehensive services in accounting, tax, payroll, and corporate legal services to multinationals and funds. With experience since 1979 and a presence in over 50 countries, including 22 proprietary subsidiaries, our advanced technological platform and proven methodology enable us to guarantee efficient management in compliance with local regulations.