Central American Free Trade Zone Comparison
Leasing a free trade zone space in Central America is a game-changer for businesses, especially those in the manufacturing industry and business process outsourcing. The most significant advantage of leasing in a free trade zone in central america are the different types of fiscal incentives the central American governments will offer.
An example, is ZIPSA, located in Managua, Nicaragua, offers warhouse spaces specifically designed to meet the needs of such businesses. The most significant advantage of leasing in ZIPSA's free trade zone space and establishing your operations in Nicaragua is the 20 year tax incentives offered by the Nicaraguan government which is composed of two 10 year periods. The Nicaraguan Free Trade Zone regiment offers tax exepmtions for Corporate Tax (Income Tax), Municipal and property, import of raw materials, machinery, equipment, indirect taxes, and export taxes.
This can result in substantial cost savings, allowing businesses to allocate resources towards other areas of their operations. Imagine the competitive edge your business can gain by saving on taxes and reinvesting that money into research and development or expanding your workforce.
To compare and contrast further, lets take a loot at the other Central American Free Trade Zone Fiscal Incentives offered:
This report provides a comprehensive overview of fiscal incentives offered by Central American Countries for businesses wishing to establish operations within free trade zones. The information was compiled from the Asociacion de Zona Francas las Americas.
Guatemala offers a 12 year fiscal incentive for businesses looking to establish themselves in free trade zones.
- Important note: Companies receiving tax credits from their home country for Guatemalan income taxes may not qualify for this exemption. Free Trade Zone Law can be found here.
El Salvador Offers a 10 - 15 year fiscal incentive for businesses looking to establish themselves in free trade zones. 10-year corporate income tax exemption for businesses established within the designated "Metropolitan Area.", and 15-year corporate income tax exemption for businesses established outside the "Metropolitan Area" (with a 30% tax obligation after year 12).
- If the business can apply for the 15 year permit, after 12 years, the business has to pay 30% corporate tax. Free Trade Zone Law can be found here.
Honduras offers a 20 year period for free trade zones.
Costa Rica offers multiple lengths of fiscal incentives. Greater Metropolitan Area (GAM): 100% tax exemption for up to 8 years, followed by a 50% exemption for an additional 4 years, and Outside the GAM: 100% tax exemption for up to 12 years, followed by a 50% exemption for an additional 6 years.
Panama offers no specific exemption period, the free trade zone permit remains valid until revoked by the legislative assembly or by legal violations.
In summary, this blog post is a great resource for businesses considering leasing space in a Central American Free Trade Zone (FTZ). It provides a comprehensive overview of the fiscal incentives offered by each country, as well as a specific example of an FTZ in Nicaragua. By understanding the benefits of FTZs, businesses can make informed decisions about where to locate their operations
This blog post can answer the following questions about Central American Free Trade Zones (FTZs):
- What fiscal incentives are offered by Central American countries to businesses operating within their FTZs?
- What are the benefits of leasing space in a Central American FTZ?
- How do the fiscal incentives offered by each Central American country compare?
- What is a specific example of a free trade zone in Central America?
- Which industries benefit most from Central American FTZs?
- What fiscal incentives are offered by Central American countries to businesses operating within their FTZs?
- What are the benefits of leasing space in a Central American FTZ?
- How do the fiscal incentives offered by each Central American country compare?
- What is a specific example of a free trade zone in Central America?
- Which industries benefit most from Central American FTZs?
- Is there a minimum lease term required to qualify for the tax incentives?
- Are there any restrictions on the type of business that can operate in a Central American FTZ?
- What are the labor regulations and requirements for hiring employees in a Central American FTZ?
- What infrastructure and amenities are typically available within Central American FTZs?
- How does establishing a business in a Central American FTZ compare to leasing space in a traditional location?