Latin America Collection

Nicaragua's budding tourism and real-estate markets, coupled
with a pro-business government that is eagerly seeking foreign
investment, have created a favorable atmosphere for starting
related businesses.
In addition, Nicaragua's new reforms to Law 306 are making it
easier for small businesses to invest in tourism development (see
separate section).
Foreigners, in recent years, have started successful businesses in
Nicaragua in the following areas: midrange/high-end restaurants
and bars; hotels; real-estate services; real-estate development;
franchising; foreign-language bookstores; gift shop; fishing
tours/charters; transportation; mining; free-trade zones (textiles,
tobacco); exports (handicrafts, lumber, meats, agriculture);
imports (finished products, machinery, auto parts, food
products); and English-language magazines/newspaper
publication.
Geography, topography, infrastructure, population distribution
and demographics are the major determining factors for which
businesses go where. Mining is in the rural north-central part of
the country, fishing charters are focused on Lake Nicaragua, the
south Pacific beach towns and the Río San Juan; free-trade zones
tend to be within close proximity to the airport; and restaurants
are centered in Managua and the tourist spots of Granada and
San Juan del Sur.
Businesses don't necessary have to rely on tourists and a foreign-
expat clientele. There is a minority core of wealthy Nicaraguans
who have more disposable income than most tourists. Most
successful businesses attract both a Nicaraguan core clientele,


while appealing to visiting tourists and foreign residents. In
other words, everyone with money to spend.
For example, several bars/restaurants in Granada fill on weekends
with groups from all over the world: tourists visiting Granada,
and well-to-do Managua folk who drive an hour to Granada to
get dinner or party, despite the abundance of options in the
capital.
The trick to starting a successful business in Nicaragua is the
same as everywhere else in the world: find your niche. Nicaragua
is ripe for innovative foreigners willing to take a risk and start
businesses that have not previously existed. Start-up costs for
small businesses are less than in the U.S. or Canada, but
successful businesses in North America or Europe may not be
cash cows in Nicaragua.
For example, it is very difficult to make money in the bar
business in Nicaragua ­ profit margins are very slim and only a
select few bars turn comfortable profits. Most restaurant/bars
make their money on food, not beer. Opening a bar in Nicaragua
is not the same as opening a bar in New York, even if your sale
volumes are the same. Do you homework before investing, and
consult business chambers and other more-seasoned investors to
get a better idea of what works and what doesn't.
Special Considerations for Foreign Investors
Foreign Investors may, but are not required, to register
investments and negotiate a foreign investment agreement with
the Ministry of Economy and Development. This guarantees the
investor the following privileges under Foreign Investment Law:
1. Repatriation of foreign capital, less any losses incurred, 3
years after the capital to be repatriated entered the country.


2. Remittance abroad of the net profits generated by the
capital registered.
3. Prompt, adequate and effective compensation in the case of
expropriation for reasons of public utility and social
interest.
In addition to the benefits listed above, other tax benefits may be
individually negotiated depending on the type of business
incorporated. Investors who do not register their capital may still
make remittances through the parallel market, although law does
not guarantee these transactions. The U.S. Embassy is aware of
no investor who has encountered remittance difficulties since the
inception of the Foreign Investment Law
Establishing a Business in Nicaragua
The first step to forming a corporation in Nicaragua is to form a
"Sociedad Anónima" (S.A.): a judicial person or a legal entity,
created under the authority of the law and capable of rights and
obligations.
Costs and Expenditures for Legalizing an Enterprise in
Nicaragua
1) Notary fees (approx) ................................................$650
2) Registry fees and taxes registration
of social contract......................................................$500
3) Registration of books and records ............................$100
4) Registration of commercial license .............................$20
5) Registry of Contributors (RUC) ..................................$1
6) Registration with local municipality ..........$1,000 (varies)
7) Other taxes (based on % of capital stock).....$540 (varies)
8) Total costs and expenditures ..................................$2,811
(based on social capital of $100,000)
*Courtesy of AmCham Nicaragua


Start Up Business Ideas in Nicaragua
- Spanish/English language
- Food imports
schools
- Toy store
- An English, French, German or
- Athletic footware
Italian newspaper
- Private postal service
- A private bilingual elementary
- Janitorial and maid service
or high school
- English bookstore
- Business consulting firm
- Charter fishing and scuba
- New agricultural products
diving
- Internet consulting and web
- Foreign residents association
page design
- Travel agency
- Translating service
- Super and mini markets
- Bred and breakfast hotel
- 24-hour pharmacy with home
- Restaurants
delivery
- Automobile parts
- Pizzeria
- State of the art gas stations
- Celular phones and beepers
- Fast food franchises
- Office products and supplies
- Copy centers
- Offshore bank
- Importing used cars from the
- Money changing
U.S.
- Furniture factory
- Computer sales and software
- Cigar exporting
- Laundry (self-service)
- Swimming pool construction
- Bicycle shop
- Real estate office and find-a-
- Bakery
home
- Money transfers
- Satellite T.V. and cable
- Housing renovation
- An English radio station
- Hardware store
- A driving school
- Food imports
- Pawn shop
- Toy store
- Voicemail
- Athletic footware
- Manufacturing of clothing
- Private postal service
- US and European newspaper
- Secretarial and typing service
distribution


Despite improvements in recent years, establishing a business in
Nicaragua can be a tedious process, requiring at least 6 different
permissions.
Steps/Costs to Establishing a Bar, Pool Hall, Nightclub:
1) Registry of Contributors (less than $1)
2) Municipal solvency (about $1)
3) Permission from National Police ($15)
4) Permission from Fire Department ($3)
5) Record from municipal office of environment and
urbanization (at least $30)
6) Installation of basic services (variable)
7) Lawyer's fee (variable)
Steps / Costs to Establishing an Export Business:
The following paperwork must be presented to an Export
Processing Center (Cetrex).
1) photocopy of Registry of Contributors (RUC) (less than
$1)
2) Record of Contributors, from Tax Office (DGI) (no cost)
3) Registry of signatures
4) Identification of exporter and representatives
5) Notarization document for Customs (variable cost)
6) Inscription fee (between $2,000- $25,000)
7) Lawyer's fee (variable)
Steps/Costs Lodging, Cafeterias, Restaurants:
1) License from Nicaraguan Tourism Institute (INTUR)
($6)
2) Inscription of business (variable)
3) Inscription of property (variable)


4) Registry of Contributors (RUC)
5) Health Ministry Sanitation license (between $6-$1,800)
6) Municipal guarantee
7) Lawyer's fee (variable)