In order to attract and further promote the economic advantages of tourism, Nicaragua enacted a tax incentive law in 1999. This law was made in an attempt to boost foreign and local investment in the tourism sector. Under this law, generous tax breaks have been offered to a number of tourism related businesses. These include, but are not limited to:

* Hotels, condo-hotels, B&Bs
* Eco-tourism operators
* Air and water transportation services
* Car Rentals
* Boat rentals and recreational vehicle rentals

Since the proclamation of Law 306, Nicaragua’s tourism industry has really matured and is now capable of serving a broad range of travel tastes.

An increasing number small businesses, both foreign and local, have found success with this regime. Examples of businesses taking advantage of the Law 306 tax advantages are:

* Small hotels, B&Bs, hostel operators
* Day Trip Tour Companies
* Fishing Charters

In recent years, a number of real estate developments have used the Law 306 tax incentives in the form of condo-hotel offerings. The developer is able to take advantage of not paying sales tax or import taxes on select items required to build the condo-hotel and its related amenities. The owner of a condo unit in a Law 306 approved condo-hotel, is also able to benefit from generous tax incentives. These incentives include:

* a waiver of the land transfer tax on the purchase of your property (1% of the purchase price),
* an exemption from having to pay property tax on your property for 10 years; and
* an exemption from having to pay income tax on rental income earned from this property for 10 years.