by Fidel Sanchez, BLP Legal
Some of these tax incentives for the development of geothermal power in Nicaragua include 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.
A key aspect to be noted is that ENEL (Empresa Nicaragüense de Electricidad), a state-owned company for power development, should own at least a 10% equity interest in the specific geothermal exploitation project and must have a seat at the Board of Directors with right to speak and vote in the company that was granted the exploitation concession. On the other hand, the remaining 90% equity interest must be owned by the specific domestic or foreign investor for up to a 30-year exploitation concession period following the execution of the exploitation agreement.