First and foremost it is important to make it clear what it is we are talking about
What is the electric mobility?
Electric mobility makes use of one or more electric motor to generate locomotion. Electric mobility consists of the integration of new technologies in order to move such as bicycles, scooters, motorcycles and electric cars and has become one of the main objectives in the world to mitigate damage to the environment.
Given the need to accelerate the transition of the transport sector towards electric vehicles in the country and given the high cost of these types of vehicles, it is necessary to have fiscal incentives to facilitate their deployment in Nicaragua, therefore, on February 15 of the current year 2022, Law No. 1111, “Reform Law and Additions to Law No. 554, Energy Stability Law” was approved in the Nicaraguan National Assembly.
What incentives are included in the new law?
Vehicles
The new law establishes tax incentives for new Electric Vehicles for a period of 5 years from its publication in La Gaceta, Official Gazette. New Electric Vehicles shall be understood as any motor vehicle used for the transfer of light or heavy cargo or passenger transport, propelled entirely with electrical energy from its batteries and that has one or more electric motors to propel itself and does not have an internal combustion engine. As of the date of entry into force of the law, said vehicles are exempt according to the following table:
The definition of Electric Vehicles includes: electric automobiles/cars, electric trucks, electric vans, electric vans, electric minibuses, electric buses (includes those powered by a mechanical arm using electricity from overhead cables), electric motorcycles, bicycles, electric velocipedes and ships, ships or electric boats. Some recreational vehicles such as electric sports cars (coupe or convertible), golf carts, yachts and luxury ships, among others detailed in the law, are exempt from the aforementioned tax benefits.
The public sector, the public collective passenger transport service, the passenger and cargo water transport service, as well as electric trucks for cargo transport are exempt from 100% of taxes without limit of the CIF value established in the table. Electric Vehicles are also exempt from regulations on gas, smoke and noise emission control devices.
Charging stations (or recharging)
The charging (or recharging) stations to supply and sell electrical energy to third parties intended solely for the recharging of electric vehicles, as well as the new equipment and components that serve as spare parts for said stations will be exempted by exhaustive list from the payment of the DAI, ISC and VAT. These recharging centers must be authorized by the Ministry of Energy and Mines.
It is the responsibility of the Ministry of Finance and Public Credit, in coordination with the General Directorate of Customs Services, to determine the exhaustive list for the purposes of applying the aforementioned exemptions. Said list must be issued and published in La Gaceta, Official Gazette within a period not exceeding 4 months from the publication of the law. Likewise, the Ministry of Finance and Public Credit, together with the Ministry of Energy and Mines, is responsible for promoting electric mobility.
It is our opinion that the exemption table should be applied in such a way that it allows all vehicles to be benefited by this law, regardless of their CIF value. Let me explain: taking as an example a vehicle with a CIF value of U$40,000, the first U$30,000 should be exempted from 100% of DAI, ISC and VAT and on the excess value of more than U$30,000, (in the case of the example it would be US$10,000) should be exempted from 100% of DAI, 75% of ISC and 50% of VAT.
For more information, contact us at: info@central-law.com
Álvaro Molina Vaca
Partner
CENTRAL LAW in Nicaragua
