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PRESIDENCY OF THE REPUBLIC OF NICARAGUA
DECREE No. 89-99

The President of the Republic of Nicaragua
by the power the authority invested in him by the Political Constitution

HAS DICTATED

The following Decree of
Regulations for Law No. 306

“Law of Incentives for the Tourism Industry of the
Republic of Nicaragua”

THE NATIONAL ASSEMBLY OF THE REPUBLIC OF NICARAGUA WHEREAS

I

That it is a duty of the State to create and promote conditions and adequate measures for the
promotion and operation of tourism, within a sustainable development policy regarding the
protection of the environment and the national culture.

II

That Nicaragua has bountiful natural beauty, such as: volcanoes, lakes, lagoons, rivers and
hundreds of kilometres of beautiful and almost unknown beaches, which constitute a potential that
merits development in order to reach the level of growth attained by other countries of the world.

III

That to this end it is necessary to establish a simple, rational and rapid process, for the creation
of tourism products in the country that stimulate the economic growth of other sectors.

IV

That tourism activity is of national interest having, basically, an export character, which allows
the inclusion of local labour, generating benefit for the economy and positive effects in the
balance of payments of the country.

V

That it is necessary to adopt mechanisms to achieve the conjunction and co-ordination of the
actions of the public sector and the private sector to promote the development of the Tourism
Industry in Nicaragua.

In exercise of its authority:

DECREES
The following:

REPUBLIC OF NICARAGUA’S TOURISM INDUSTRY INCENTIVES LAW

CHAPTER I
GENERAL PROVISIONS

Art. 1. - Tourism is declared an industry of national interest.

Art. 2. - The present Law has the purpose of granting incentives and benefits to natural or juridical
persons, national or foreign, who dedicate themselves to tourism activity.

In order to comply with whatever is provided in the preceding article:

1) The Nicaraguan Tourism Institute (INTUR) and the Ministry of Finance and Public Credit shall
establish an adequate co-ordination between them, which permits the establishment of a simple,
rational and rapid process to facilitate and expedite the development of tourism activity in the
country and the granting of the benefits of this Law.

2) The other Ministries of the State, Agencies of the Autonomous Entities of the State, having
permanent joint relations with national tourism activity, will provide the required and necessary
collaboration to support INTUR and impel said development.

3) The Central Bank of Nicaragua (BCN) and INTUR shall establish agreements and mechanisms
that stimulate and support the financing, as well as the public and private investment, necessary
for the development of tourism activities.

CHAPTER II
NATURE AND CHARACTER, DEFINITIONS

Art. 3. The following natural and juridical persons dedicated to and investing directly in tourism
services and activities duly authorised by INTUR, may avail themselves of the incentives of
this Law:

1) Hotel Service Industry (Hotels, Motels, Apart hotels, Condo-hotels).

2) Investments in Protected Areas of Tourism and Ecological interest, without affecting the
environment, with prior authorization from the pertinent authority (MARENA), as well as in public
places of tourism and cultural interest; jointly with historical preservation.

3) Air Transportation.

4) Water Transportation (Maritime, Fluvial and Lake Transportation).

5) Internal and Receptive Tourism; and Ground Collective Tourism Transportation.

6) Foods, Drinks and Amusement Services.

7) Investment in filming of motion pictures; and in events beneficial for tourism.

8) Rental of ground and water vehicles to tourists.

9) Investments in Tourism Infrastructure and connected Tourism Equipment.

10) Development of Nicaraguan Crafts; Recovery of Endangered Traditional Industries;
Production of Traditional Folk Musical Events and of Folk Dances; and publications and materials
for Tourism promotion.

11) Small, medium and mini corporations that operate in the Tourism sector, in all areas of said
sector.

Natural or juridical persons that directly invest in the development of tourism activities, or that
participate indirectly by financing such activities, such activities located in Special Zones of
Tourism Planning and Development (Z.E.P.D.T.), defined as such by INTUR, shall also benefit
by the exemptions and fiscal credits of the present Law.

The Benefits of concessions over areas or installations which are property of the State, where the
Executive Branch, through INTUR, has an interest in the development of high quality tourism
activity, can be equally obtained by the corporations willing to invest in said areas and operate
said installations under the terms and conditions of a long term contract.

Art. 4. For all intents and purposes of this law, the following definitions are established:

4.1. Tourism Activity in the Hotel Service Industry: The ownership and/or the administration of
installations providing services for tourists and visitors for public occupancy through payment,
jointly or not, with other tourism activities. Said activity varies depending on the category of
services, type of installations and type of ownership, as follows:

4.1.1. Major Lodging Facilities: Installations of the Hotel Industry of Major Class, which comprise
Hotels, Condo-Hotels, Apartment-Hotels, Time-Sharing Occupancies, and Motels. Such
installations will have no less than fifteen (15) habitation units for lodging and will be operated
under the standards and sanitary and efficiency conditions dictated by INTUR and as per the
Hostelry Regulations.

4.1.1.1. Hotels: Lodging installations for guests in transit, in a building, part of the same or group
of buildings, approved by INTUR to provide complete food service, cleaning and other accessory
services, and connected with tourism activities, which fulfil the lodging and operation
requirements of Major Lodging Facilities and Hostelry Regulations.

4.1.1.2. Condo-Hotels: Set of habitation units in a building or group of buildings where each unit is
obtained within a tourist regimen of horizontal property, which fulfil the operational and lodging
requirements for Major Lodging Facilities and Hostelry Regulations.

4.1.1.3. Apart-Hotels: Set of habitation units in a building or group of buildings, equipped with
individual ranges where partial services are provided for cleaning, but not necessarily food, and
which comply with the requirements of Major Lodging Facilities and Hostelry Regulations.

4.1.1.4. Time-share Lodging: installations, in buildings or group of buildings, subject to contractual
patterns and regulations through which usage rights are acquired over the premises by different
persons, in different periods of the year. Such installations may qualify under this Law if it
complies with the requirements of Major Lodging Facilities and Hostelry Regulations.

4.1.1.5. Motels: Installations oriented towards automobile travellers and tourists, due to their
location on highways and the proximity of parking spaces to the rooms, with cleaning services,
but not necessarily food services, which for the effects of this Law comply with the requirements
of Major Lodging Facilities and Hostelry Regulations.

4.1.2.1. "Paradores de Nicaragua": A trademark registered by INTUR and seal of quality granted
by INTUR to distinguish those lodging installations, of a small or medium size, with complete
services of cleaning and food, oriented to the travelling tourist, which stand out as inviting and
picturesque, due to their modern accommodations, excellent service, economy, international
quality, traditional regional food, and above all, an overall architectural harmony with the
cultural-historical and/or natural-ecological surroundings. They will qualify under this Law as well as
for other benefits of the "Paradores de Nicaragua" program, if they comply with the Hostelry
Regulations.

4.1.2.2. Paradores de Nicaragua Program: A program sponsored by INTUR to promote and
stimulate the creation of a national network of Paradores, with the incentives of this Law and
other specific promotion and marketing measures prepared and implemented without cost by the
Institute. These Paradores can be new hotel installations, or existing ones whenever their owner
undertakes new investments for the purpose of improving and remodelling said installations in
order to qualify under the standards applicable to the Paradores de Nicaragua promoted with the
quality seal of INTUR as per Hostelry Regulations.

4.1.3. Minimal Lodging Facilities: Small and/or specialised lodging establishments, including
Family Hostelries, Lodging Houses, Cabins, Guest Houses, or Rooming Houses, Camping and
Caravaning Areas. They will qualify under this Law if they comply with the Hostelry Regulations.

4.1.3.1. Family Hostelries: Small lodging establishments, in rural or urban zones, operated by an
individual or a family, with home style dining services.

4.1.3.2. Lodging Houses: Budget lodging in tourist areas with minimal cleaning and food services.

4.2.3.3. Cabins: Group of individual buildings in tourist areas and beaches, with partial services
not necessarily of cleaning and food.

4.1.3.4. Guest Houses and Lodgings. Budget family lodgings in urban zones, with or without food
service.

4.1.4. Camping and Caravaning Areas: Places with camping installations to park vans and similar
towing vehicles for lodging, equipped with cleaning services, drinking water and electricity, and
other minimal services for travellers. They will qualify under this Law if they comply with
Hostelry Regulations.

4.1.5. Hostelry Regulations: Document prepared by INTUR that determines the terms and
conditions under which different categories of the hotel industry qualify for purposes of this Law
and which defines the promotional programs of Paradores de Nicaragua. The Regulations
establish different standards for:

1) Hotels and other installations, which consist of Condo-Hotels, Apart-hotels, Time-Share
Lodgings and Motels for Travelling Tourists;

2) Installations called "Paradores de Nicaragua".

3) Minimal Hostelries, which are installations which include Family Hotels, Inn-Houses, Cabins,
Guest Houses et al.

4) Camping Areas,

4.2.1. National System of protected Areas (SINAP): Protected Areas System managed by the
Ministry of the Environment and of Natural Resources (MARENA), which incorporates more than
seventy (70) locations in the three (3) Ecological regions (Pacific, Central, Las Segovias and
Atlantic) of Nicaragua, classified in ten categories:

1) Biological Reserve;

2) National Park;

3) Wildlife Refuge;

4) Natural Reserve;

5) Genetic Resources Reserve;

6) National Monument;

7) Historical Monument;

8) Protected Land and Marine Scenery;

9) Biosphere Reserve;

10) Forestry Reserve.

SINAP management plans by MARENA contemplate the possibility of low impact eco-tourism
activities in categories 1 and 3; and tourism activities in categories 2,4,6,8 and 9; no tourism
allowed in categories 5 and 10.

4.2.1.1. National and Historical Monuments: Areas which are part of the Protected Areas of the
National System (SINAP) under the management plan of MARENA. The areas designated as
National Monuments, such as Archipelago of Solentiname, have outstanding natural and cultural
characteristics and scenic beauties of national and international interest. They are of great value
because of the rarity of their characteristics. The areas designated as Historical Monuments are
well-known sites with historical value; and archeological and cultural sites of national importance
such as El Castillo de la Inmaculada Concepcion. These are destined for restoration and are
associated with natural areas. Such sites include ruins and historical buildings that are intended to
be preserved.

4.2.1.2. National Parks: Areas, which are part of the National System’s Protected Areas (SINAP)
under the MARENA management plan. Areas currently designated as National Parks, such as
Saslaya, Archipelago de Zapatera and Masaya Volcano, are relatively large and include
ecosystems, habitats, scenery, scenic and special beauties of national and international
importance.

4.2.1.3. Protected Areas of Tourism and Ecological tourism Interest: Those SINAP areas where
the possibility of tourism activity is intended, under the category of "protected Land and Marine
Scenery" and "Biological Reserves"; and the possibility of low impact eco-tourism activities, under
categories "Biological Reserves" and "Wildlife Refuges".

4.2.2. Tourism and Cultural Interest Sites: Areas such as municipal parks, museums,
archeological parks, public thoroughfares, not necessarily designated by SINAP managed by
MARENA or in other designated facilities maintained by the Nicaraguan Culture Institute (INC),
such as the National Cultural Patrimony, or by the Municipalities, that because of their tourism
and/or cultural interest, have been approved by INTUR for investments that benefit their owners
as income tax deductible expenses under the terms of this Law.

4.2.3. Settings of Historical Preservation: Spaces combining private and/or public properties,
located and urban and other areas, that could or not be integrated as National and/or Historic
Monuments that can or not be integrated to Tourism and Cultural Interest Public Sites, which,
because they deserve to be preserved as a whole, in a cultural/historic interest, as well as for
tourism, can be approved by INTUR, in agreement with INC, for investment which benefit their
owners under the terms of this Law.

4.2.3.1. Historical Preservation Sites Regulations: A document prepared by INTUR, in agreement
with INC, dictating the conditions under which investments and donations for projects of Setting
of Historical Preservation, qualify for the effects of this Law.

4.3. Air Transportation Tourism Activity: Services provided by companies involved in air
transportation of persons within the national territory and whose contribution to National Tourism is
certified by INTUR for the effects of this Law.

4.4. Water Transportation for Tourism Activities: Services provided by companies dedicated to
water transportation of persons within the national territory and whose contribution to tourism’s
function is certified by INTUR, and all activities of the persons, natural or juridical, dedicated to
aquatic sports for tourism and entertainment purposes, through hydro-boats, boats for sport
fishing, yachts, sailboats and non-motorized boats, or other entertainment accessories, such as
surf and sail boards, water skies, diving equipment, and others, used for water sports, and for the
effects of this Law.

4.5. Internal and Receptive Tourism activities; and of collective Tourism Land Transportation;
Services provided by companies, known as Tour Operators, dedicated to operate internal and
receptive tourism within the national territory; and by companies transporting persons between
airports, docks, hotels and other tourist destinations, inside and towards the border posts of the
Republic of Nicaragua; and whose contribution to tourism’s function is certified by INTUR for the
effects of this Law.

4.6. Tourism activities in Food, Drink and Amusement Services: the ownership and/or
administration of installations providing food, drink and amusement services for tourists and
visitors in restaurants, bars, "Tourist Eateries", discos, night clubs and casinos, which can
demonstrate their ties mainly with tourism and which are declared of tourism’s interest by INTUR.
Such facilities shall qualify under this Law if they comply with the Food, Drink and Amusement
Regulations.

4.6.1. "Mesones de Nicaragua" a registered Trademark by INTUR and seal of quality granted by
INTUR to distinguish those installations of food and drink services, known as inviting and
picturesque, for the quality of their traditional and/or regional cuisine, for the hygiene and
cleanliness characterizing its operations and installations, excellent service, reasonable rates, and
also by their excellent harmonizing of their interior and exterior architecture and decorativeness
with the environment in which they are located. Such facilities shall qualify under this Law, and
for other benefits of INTUR’s Program of "Mesones de Nicaragua", if compliance with the specific
requirements pertaining to "Mesones de Nicaragua" in the Food, Drink and Amusement
Regulations is met.

4.6.2 "Mesones de Nicaragua Program": a program sponsored by INTUR to promote and stimulate
the creation of a national network of "Mesones," with the incentives of the Law and other specific
measures of promotion and marketing prepared and implemented without cost by the Institute,
dedicated to the taste and/or gastronomy of traditional and regional cuisine, that can be newly
installed, or the existing ones, when their owners undertake new investments with the purpose of
improving and remodeling said installations to qualify under the standards and criteria concerning
Mesones de Nicaragua promoted with the INTUR seal of approval in the Food, Drink and
Amusement Regulations.

4.6.3. Food, Drink and Amusement Regulations prepared by INTUR which dictates the standards
and conditions under which, the various tourism activity in services of food, drinks and
amusement qualify for the effects of this Law, and which define the promotional program of
Mesones de Nicaragua. The Regulations establish different standards for:

1) Restaurants with and without Bars.

2) Installations called "Mesones de Nicaragua".

3) Discotheques and Night Clubs.

4) Casinos, Racetrack Installations for races with Betting Systems, and other Gambling Games.

4.7.1. Filming of Motion Pictures for the benefit of Tourism: Productions by companies within
national boundaries dedicated to filming feature length motion pictures, oriented to the
International Market, and which are transmitted abroad, and whose benefits and contribution to
tourism’s function are certified by INTUR for the purposes of this Law.

4.7.2. Artistic, Sporting and other Events which benefit tourism: Productions by corporations
within the national boundaries that are dedicated to the production of artistic, sporting and other
events, oriented to the international market, and which are transmitted abroad, with the condition
that, during and at the end of the event, they portray images that promote tourism to Nicaragua,
and whose contribution and benefit to tourism activity is certified by INTUR for the purposes of
this Law.

4.8. Tourism activity in the leasing of Land and water vehicles: Services offered by natural or
juridical persons, who have or want to have a fleet with a minimum of twenty (20) land vehicles,
or in the case of water vehicles, of a minimum of one (1) vehicle or ship, except that for rental of
water motorcycles, the minimum is of six (6) vehicles, with the condition that all of these vehicles
are dedicated to rental to the public for pre-established periods of time.

4.9. Tourism connected Activities and Equipment: The ownership and/or administration of
installations providing services for tourists and visitors for activities connected to tourism which
are not tourism activities in the Service of the Hotel Industry; investments in Monuments, Sites
and Settings of Historical Preservation; and the service of food, drinks and amusements, which
although not connected with said activities, are authorized and certified by INTUR, and for the
purposes of this Law.

Among such activities and connected tourism equipment, are included: work and equipment for
the development of infrastructures related to a tourism project approved by INTUR under this
Law, such as airports, docks, accesses, provision of water, energy and telephones, sewage
treatment plants; rehabilitation of public installations related to recreation and tourism; training and
vocational learning in tourism services; installations such as golf courses, tennis courts and for
other tourism sports such as target shooting, model airplanes, racetracks, and riding centers;
convention and conference centers, private museums, and zones of archeological exploration and
investigation, with the condition that they are managed with due consultations and authorization
from INC; theme parks, Aquariums and Marinas; ecological, botanic and submarine parks and
installations, installations for diving and submarines sports, with the condition that such facilities
are operated with due consultation and authorization from MARENA; tourism installations in areas
of caves and caverns, of forests and mangroves, canyons and reefs, and of thermal waters
installations for the operation of ecological tourism and tourism specialized in adventure,
parachuting, alpinism, hot air balloons, and any other, as provided by INTUR.

4.10.1. Development of Nicaraguan Crafts: Activities on the part of natural or juridical persons
dedicated to the elaboration or fabrication of individual crafts, crafts production, and the trade or
sale and resale of decorative and/or utility objects, hammocks, handcrafted furniture, hats,
clothes, handcrafted decorations and accessories, and popular traditional art, excepting those
made by crafts pertaining to the tobacco industry. Handicrafts are closely related and of great
importance to tourism, wherefore INTUR proposes to promote the production and trade of the
same. For the purpose of this Law, Nicaraguan Handicrafts are those crafts, hand made objects,
and products of traditional popular arts such as ceramics, paintings and sculpture, which are made
exclusively by hand and/or with hand tools and exclusively inside the territory of Nicaragua,
which include those distinguished by creations called and classified as Plastic Arts or "Fine Arts".

4.10.2. Recovery of Endangered Traditional Industries: Activity on the part of natural or juridical
persons, which, as well as crafts, are considered closely related and of importance for tourism,
and being in danger of extinction, INTUR together with INC, is interested in their recovery and
revival with the incentives of this Law. This means, for example, the operation, repair,
manufacture and rehabilitation of carriages, carts drawn by horses, as well as ironworks of
colonial arts and crafts, and the restoration of pre-Columbian and/or Colonial art.

4.10.3. Production of Traditional Folk Music and Folk Dance Events: Activities on the part of
artists and popular artists associates in traditional folk music and folk dances, which are
considered equally related and of importance for tourism, and which INTUR in conjunction with
INC, is interested in sponsoring and promoting throughout the national territory.

4.10.4. Publications and Tourism Promotional Materials: All types of printed matters, books, maps
and guides, postcards, photographs, posters and other video graphic and acoustical (tapes,
cassettes, compact discs, etc.) produced and distributed without cost or for sale, with the purpose
of promoting tourism.

4.10.5. Registry of Artists and Craftsmen and Traditional Industries: Registry of Traditional Folk
Music and Folk Dance: double Registry or in two (2) parts, maintained by INC of all artisans and
musical and dance artists, and individual or juridical groups of this sort, including persons
dedicated to such Traditional industries. To enter and belong to the Registry, persons should
demonstrate that they are exclusively or primarily dedicated to the artisan occupation, which they
perform, and that they comply with the IRC’s Artisans and Musical Artists and Folk Dance
Regulations. Accordingly on its part, INC will maintain and update the Registry continually, or at
least annually, for the purpose of qualifying the beneficiaries of this Law. In the case of persons
or corporations dedicated to the resale of traditional crafted products, they will appear in the
Investment Registry maintained by INTUR.

4.11.1. Nicaraguan Tourist Regions: The six (6) regions of the National Territory identified by their
tourism development potential in the extensive study completed by the Ministry of Tourism in
1995, which serve as a pragmatic base to establish the present national tourism development
policy.

4.11.2. Special Zones of Tourism Planning and Development (Z.E.P.D.T.): Zones of particular
tourism interest which are part of the six (6) Tourism Regions of Nicaragua and which are so
classified by INTUR with the purpose of guiding and planning the development of such zones of
maximum priority for the national development of tourism, through the Master Plans for the use
of land and infrastructure, and of general and/or specific guidelines to facilitate and direct public
and private investments in such areas. INTUR recognizes four different types of Z.E.P.D.T.

1) Zones of National Strategic Interest for tourism, which are those lacking the basic
infrastructure for its development.

2) Special Zones of interest to tourism due to their Urban/Cultural/Historic Context, with Master
Plans being prepared by INTUR with the participation of INC, and of the interested Municipalities.

3) Special Zone of interest to tourism due to its Environmental/Natural/Ecological Context, with
Master Plans being prepared by INTUR with the participation of MARENA, and the interested
Municipalities.

4) Special Zones of interest to tourism of a Specific Character, which are small areas that without
requiring the preparation of a Master Plan, merit attention and special treatment as tourism
resources.

4.12 Tourism Concessions: Contracts granted by the Executive Power, through INTUR, to the
private sector to develop and/or operate installations and services of public tourism activities, in
areas that are property of the State or of INTUR.

4.13 Registry of Tourism Investments: Official Registry created and kept by INTUR, where
natural or juridical persons are registered who wish to take advantage of the regimen of incentives
to which this Law refers, are thereby registered.

4.14 Rights and Taxes: Under "Rights" it is normally understood as the Import Fee Right (D.A.I.),
and the Temporary Protection Fee (A.T.P.); under "taxes", it is normally understood, the Specific
Consumer Tax (I.E.C.) and the Value Added General Tax. (I.G.V.).

CHAPTER III
INCENTIVES AND BENEFITS

Art. 5. - In order to promote investments in tourism activities, INTUR will grant the following
incentives and fiscal benefits:

5.1. Companies providing services to the Hotel Industry, which invest in the construction,
remodeling, additions, equipment, rehabilitation and development of Hotels, Motels and other
similar installations such as Condominium Hotels, Apartment Hotels, etceteras, as per the
Hostelry Regulations of INTUR with a minimum of fifteen (15) rooms, and whose minimum
investment, per project and including the value of the land, will be in dollars or their equivalent in
national currency:

Five hundred thousand dollars (US$500,000.00), or its equivalent in national currency, in
Managua’s urban area.

One hundred fifty thousand dollars (US$150,000.00), or its equivalent in national currency, in the
rest of the Republic.

If said investment qualifies under INTUR’s Paradores de Nicaragua Program, the minimum
investment is reduced to Two hundred thousand dollars (US$200,000.00), or its equivalent in
national currency, in the urban area of Managua, and Eighty thousand dollars (US$80,000.00), or
its equivalent in national currency, in the rest of the Republic.

In the case of Minimal Hostelries, such as hostelries, Inns, cabins, etc., the minimum investment
is reduced to One hundred thousand dollars (US$100,000.00), or its equivalent in national
currency, in Managua and Fifty thousand dollars (US$50,000.00), or its equivalent in national
currency, in the provinces.

In the case of camping areas (camping and caravaning), minimal conditions are reduced in the
investment to One hundred thousand dollars (US$100,000.00), or its equivalent in national
currency.

In the case of Hotels and Minimal Lodging Facilities already established, which make investments
of 35% of the value of the same, which are providing services, and have authorization and
quality seal from INTUR, will also benefit from the incentives granted by this Law.

5.1.1. Exemption from Fees and Import Taxes and of the General Value Tax (I.G.V.) In local
purchases of construction materials and permanent building accessories.

The exempted materials and accessories shall be used in the construction and outfitting and this
exemption is extended if said articles are not produced or are not produced in sufficient quantity
or quality within the country.

5.1.2. Exemption from import fees and/or taxes (IGV) on the purchase of furniture, accessories,
boats, motor vehicles for twelve (12) passengers or more, motor vehicles, for cargo, which are
declared as necessary by INTUR to establish and operate tourism activity, and in the purchase
of equipment contributing to the saving of water and energy, and those necessary to insure the
security of the tourism project for a period of ten (10) years from the date said project entered
into operation.

5.1.3 Exemption from taxes on Real Estate (I.B.I.), for a period of ten (10) years as of the date
on which INTUR declares that said company has begun operations. This exemption will only cover
company owned Real Estate that is used exclusively for Tourism.

5.1.4 Exemption from the General Tax on Value (I.G.V.) for services of design/engineering and of
construction.

5.1.5 Partial exemption of Eighty per cent (80%) from the General Tax on Value (I.G.V.) for a
term a 10 years, from the date on which INTUR declares that said company has entered into
operation. If the project is located in Special Planning and Tourism Development Zone, the
exemption shall be for Ninety percent (90%). If the project qualifies and is approved under the
Paradores de Nicaragua program, the exemption shall be for One hundred percent (100%). The
company has the option of deferring the initiation and application of the said ten (10) year
exemption annually, and up to for a period of three (3) years.

5.1.6. Within the period granted for the exemption, if the company decides to make an addition
and/or substantial renewal of the project, the exemption period will be extended for an additional
ten (10) years, as of the date on which INTUR declares that the company has completed said
investment and addition. In this case, the addition project will be submitted as if it were a new
project, and the minimum investment should be of over thirty five percent (35%) of the approved
investment initially made. The extension of the tax exemption shall then be applied for a new
period of ten (10) years, for total tourism activity of the company in the project.

5.1.7. For those companies investing in tourist installations which comply with the criteria and
specialized standards under the Program sponsored by INTUR to foment and stimulate the
creation of a national network of "Paradores de Nicaragua", there will be free specific incentives
for promotion and marketing, prepared by the Institute, in the form of advertising and publications
in national and international fairs, leaflets, brochures and maps, connection to an efficient
reservations system, promotion in the Internet, etc.

5.1.8. For purposes of computation of depreciation of the assets, these shall be made as per the
Taxation and Commercial Justice Law and its Regulations.

5.2. Those natural or juridical persons investing in private projects, of improvements, promotion
and training of he tourism activity, located within the SINAP protected areas designated as
National and Historic Monuments, National Parks, Other Protected Areas of Interest for Tourism,
and Public Sites of Tourism and Cultural Interest, and in the restoration of private properties which
are a part of the Historic Preservation Enclave, authorized by INTUR in agreement with INC;
which comply with the established architectural standards for historic conservation, and ecological
protection, as the case may be, and by the corresponding institution(s), and whose minimum
investment is made in dollars, or their equivalent in national currency:

One hundred thousand dollars (US$100,000.00), or its equivalent in national currency, including
the value of the land and the structure, in the case of private properties within Historic
Preservation Enclaves.

Forty thousand dollars (US$40,000.00), or its equivalent in national currency, for projects in
SINAP protected areas.

The amount in dollars, or its equivalent in national currency, to be determined by INTUR for
contributions in improvement, promotion and training projects, in public areas within the Historical
Preservation Enclaves, in SINAP areas, and other Public Sites of interest for tourism.

5.2.1. Exemption from Real Estate Taxes (I.B.I.) for a period of ten (10) years, as of the date on
which INTUR certifies that the project has been completed, and that compliance with the
standards and conditions established for the project, has been achieved.

In the case of a partial restoration of a property located within a Historical Preservation Enclave,
that is, the external restoration or only the facade, but which includes improvements planned for
the sidewalk and the planned public illumination system. Compliance with the standards of the
restoration plan as a whole, in which case, a minimum investment is not required, an exemption
from Real Estate Taxes (I.B.I.) will be granted for a period of five (5) years, as of the date of
certification by INTUR, and of the corresponding institution(s).

5.2.2. Exemption from Income Tax on the profits derived from the INTUR authorized tourism
activity, or of the rental payment to third parties, in restored properties in Historical Preservation
Enclaves, for a period of ten (10) years, as of the date on which INTUR certifies that the project
has been completed, and that compliance with the standards and conditions for the project has
been achieved.

5.2.3. One time only exemption from the import fees and taxes, and from the General Tax on
Value (I.G.V.) in the local purchase of materials, equipment and parts, used for the construction,
restoration or equipping of the property.

The exempted materials and equipment, must be used in the construction and equipping of the
buildings that are being restored and such exemption shall be granted, if these articles are not
produced, or are not produced in sufficient quantity or quality within the country.

5.2.4. Exemption from General Tax on Value (I.G.V.) applicable to services of design/engineering
and construction.

5.2.5. Within the period granted for exemption, if the persons wish to obtain an extension of the
same, they must apply to INTUR. Accordingly, to that effect, an inspection of the establishment
to verify the state and current conditions of restoration of the property, in order to ascertain
improvements required by INTUR, together with the other corresponding institutions, to obtain an
extension of the exemption as per the Historical Preservation Enclaves Regulations. A period of
time will be granted to execute the required improvements, and once completed, if they comply
with the established requirements, they will be granted an extension for the Real Estate Tax
(I.B.I.), and of the Income Tax exemption, for an additional period of ten (10) years.

5.2.6. The lack of compliance, in the opinion of INTUR, with the architectural standards, and the
established historical conservation for Historical Preservation Enclaves, on the part of the
beneficiaries, shall be cause for the immediate suspension of all granted exemptions, as well as
possible sanctions, as per terms established by the Regulations of this Law.

5.2.7. For contributions from natural or juridical persons that decide to participate economically in
the completion of a public interest project, such as the restoration and or maintenance and
illumination of monuments and buildings, municipal parks, museums, archeological parks, in
National and Historical Monuments, National Parks and other Protected Areas of interest for
Tourism, in public sites of Tourist and Cultural interest, in the Historical Preservation Enclaves, as
well as in projects for the promotion and training in the development of activities for tourism, that
have been approved by INTUR, in agreement with INC, and/or other pertinent State Entities and
Municipalities, in which cases the minimum investment shall be established by INTUR, a
deductible expense can be considered from Income Tax of the total amount invested, with the
corresponding certification from INTUR, as to the amount of the investment and the completion
of the project.

5.3. For Air Transportation companies, whose contribution to Tourism is certified by INTUR, the
exemption from import fees and taxes and/or General Tax on Value (I.G.V.) in the local purchase
of:

5.3.1. Aviation equipment: Computer and Telecommunications materials; and other equipment
related directly to aviation and the services provided to the passengers.

5.3.2. Promotional, advertising material and stationery for the exclusive use of the air
transportation company.

5.3.3. Equipment necessary for the attention of ramp services.

5.3.4. Aviation fuel of any kind.

5.4. To natural or juridical persons dedicated to the activity of Water Transportation:

5.4.1. Exemption from Import fees and taxes, from the General Tax on Value (I.G.V.) in the local
purchase of new boats for twelve (12) or more seats, and new accessories used for collective
maritime transportation of passengers.

5.4.2. Exemption from Import Fees and Taxes, except from the General Tax on Value (I.G.V.) for
the importation of hydrofoil boats, recreational boats for tourism purposes, yachts, sail boats,
fishing vessels, fishing gear and non motorized boats and other recreational accessories (such as
surf and sail boards, skis, diving equipment, etc.) used for water sports.

5.4.3. Exemption from taxes, duties and services, for the purposes of arrival and dockage for
yachts for tourists, that visit Nicaraguan ports, whose stay does not exceed ninety (90) days.

5.5. To companies involved in the operation of internal and receptive tourism (Travel Agencies
and Tour Operators), and Collective Tourism Land Transportation between airports, docks, hotels
and other tourist destinies in the Republic of Nicaragua.

5.5.1. Exemption from import fees and taxes and of the General Tax on Value (I.G.V.) of new and
used vehicles in perfect mechanical condition, such as buses, mini-buses of twelve (12)
passengers or more; of new four-wheel drive vehicles for more than six (6) passengers and in
such case only those used exclusively by Tour Operators, specialized in hunting and adventure;
and of promotional and advertising material, provided the companies have been authorized by
INTUR, and the vehicles have been declared by INTUR as necessary for the operation of said
activity, with a prior favorable opinion issued by the Ministry of the Treasury and Public Credit.

5.5.2. Exemption from import fees and taxes and of the General Tax on Values (I.G.V.), in the
acquisition of computer equipment and accessories. The same treatment will be granted to
telecommunications equipment, or any other having a direct and necessary relation with the
service of internal or receptive tourism.

5.5.3. Exemption from import fees and taxes and of the General Tax on Values (I.G.V.) in the
acquisition of hunting fire arms, ammunitions, and sports fishing gear.

5.6. To those companies dedicated to the service of Food, Drinks and Amusements in
Restaurants, bars, gastronomical eateries, discotheque and night clubs, whose minimum
investment, including the value of the land, is of One Hundred Thousand dollars (US$100,000.00),
or its equivalent in national currency, within the urban area of Managua and Thirty Thousand
dollars (US$30,000.00), or its equivalent in national currency in the rest of the Republic.

In the case of casinos, these should be located on the grounds of hotels of one hundred (100) or
more rooms.

In the case of Restaurants, Night Clubs, Bars, and Discotheques, Casinos already established,
which make an investment of 35% of the value of the same, which are providing services, and
have INTUR’s authorisation and seal of quality, will also enjoy the incentive provided by this Law.

5.6.1. Exemption from import taxes and/or the General Tax on Value (I.G.V.) in the local purchase
of construction materials and fixed accessories of the building.

Exempted materials and accessories must be used in the construction and equipping of the
installations and said exemptions shall be granted if such articles are not produced, or are not
produced in sufficient quantity and quality in the country.

5.6.2. Exemption from import fees and taxes and/or the General Taxes on Value (I.G.V.) in the
local purchase of articles, furniture, equipment, boats and/or motor vehicles for twelve (12) or
more passengers, new or used in perfect mechanical condition and for cargo that are declared as
necessary to establish and operate Tourism Activity by INTUR, and in the purchase of equipment
contributing to the saving of water and energy, and of those necessary for the security of the
project, for a period of ten (10) years, as of the date on which INTUR declares that said company
has begun operations.

5.6.3. Exemption from taxes on Real Estate (I.B.I.), for a period of ten (10) years as of the date
on which INTUR declares that said company has begun operations. This exemption will only cover
company owned Real Estate that is used exclusively for Tourism.

5.6.4. Exemption from the General Tax on Value (I.G.V.) for services of design/engineering and
of construction.

5.6.5. For depreciation computing purposes on real estate, the rules to be followed will be as per
the Taxation and Commercial Law and its Regulations.

5.6.6. Such companies that invest in tourism installations, which comply with the criteria and
special standards sponsored by INTUR, to foment and stimulate the creation of a National
Network of "Mesones de Nicaragua", dedicated to the taste and gastronomy of traditional and
regional cuisine, shall be granted free specific incentives by the Institute, in the form of publicity
and advertising, in national and international fairs, leaflets, brochures and maps, Internet
promotion, etc.

5.7. To those companies which within the national territory, perform such activities as the filming
of feature length motion pictures that have an international character, of Artistic and Sporting
Events, and others of an international nature, and of general benefits for tourism, which are
transmitted abroad, promoting tourism in the Republic of Nicaragua:

5.7.1. Total exemption from taxes on profits derived from profits from said production or event.

5.7.2. Exemption from any national or municipal tax regulating production of the event.

5.7.3. Temporary exemption from import fees and taxes of any kind over the importation of
equipment, gear, parts, technical material, imported by the communications and Production
Company, for transmission to other countries, and of all the material used during the event, which
should de re-exported upon finalizing the activity.

5.7.4. Exemption from Income Tax for national and foreign athletes and artists, who participate in
said productions and events.

5.8. To new or existing companies dedicated to the Rental of Land or Water Vehicles to tourists,
duly authorized by INTUR:

5.8.1. Partial Exemption, every two (2) years, from Fifty percent (50%) of the import fees and
taxes and from the General Tax on Values (I.G.V.), for the purchase of new vehicles intended for
rental to tourists, with the prior favorable opinion from the Ministry of the Treasury and Public
Credit. These vehicles will be duly identified with a distinctive label provided by INTUR, without
prejudice of the documentation corresponding to the Ministry of Construction and Transport, or
other related Entities.

5.8.2. Exemption, every two (2) years, from import fees and taxes from the General Tax on
Value (I.G.V.), in the purchase of computers, their accessories, and other telecommunications
equipment used in operations for the car rental company.

5.9. To Companies investing in Tourism Activities and Outfitting, related to the construction,
equipping, development of access infrastructure, provision of water, energy and telephones,
treatment, rehabilitation and vocational training, and training in tourism and entertainment, golf
courses, and tennis courts, included in tourism complexes, and other tourism related sports such
as target practice, racetracks and riding centers, convention centers, theme parks, museums and
archeological zones, ecological, botanic and zoological parks, centers specialized in Adventure
Tourism, hunting, parachuting, flying in balloons, hiking and ecological tourism in general, airports,
docks, aquariums and marinas, which obtain the specific approval from INTUR, and whose
minimum investment including the value of the land, per project, is, in dollars or its equivalent in
national currency:

Two hundred fifty thousand dollars (US$250,000.00), or its equivalent in national currency, in the
urban area of Managua.

One hundred thousand dollars (US$100,000.00), or its equivalent in national currency, in the rest
of the Republic.

If said investment is made in a project to be developed jointly with investments that qualify under
the present Law, as investment in tourism hotel activity (Art. 5.1 supra), in monuments and
historical enclaves (Art. 5.2. supra), and in services of food, drinks and amusement (Art. 5.2.
supra), said minimum investment of Two hundred fifty thousand dollars (US$250,000.00), or its
equivalent in national currency, in the urban area of Managua, and of One hundred thousand
dollars (US$100,000.00), or its equivalent in national currency, outside said area, it is applied to
the whole of the investment.

5.9.1. Exemption from Import Fees and Taxes and of the General Tax on Values (I.G.V.) for a
period of ten (10) years, in the acquisition of materials, equipment and accessories necessary for
construction, equipping, and development of the tourist activity, with the prior authorization of
INTUR, and in the purchase of equipment contributing to the savings of water and energy, and of
those necessary for the security of the project.

The exempted materials and accessories, must be used in the construction and establishment of
tourism activities and equipping, and said exemption shall be granted if these articles are not
produced, or are not produced with sufficient quantity or quality in the country,

5.9.2. Exemption from Real Estate taxes (I.B.I.), for a period of ten (10) years, as of the date on
which INTUR certifies that the work has been completed and that compliance with the conditions
and standards established for the project has been achieved.

5.9.3. Exemption from the General Tax on Values (I.G.V.), applicable to services of
design/engineering and construction.

5.9.4. Partial Exemption from eighty percent (80%) of Income Tax for a period of ten (10) years,
as of the date on which INTUR declares that the company has started operations. If the project is
located within a Special Tourism Planning and Development Zone, the exemption will be for ninety
percent (90%). If the connected tourist activity is developed under the Paradores de Nicaragua
Program the exemption will be for one hundred percent (100%). The company will have the option
of deferring annually, and for up to a period of three (3) years, the application and initiation of the
exemption period of ten (10) years from said tax.

5.9.5. If, within the period granted for the exemption, the company decides to make an addition
and/or substantial renovation of the project, the exemption period will be increased for an
additional ten (10) years, as of the date on which INTUR declares that the company has
completed said investment and addition. In such case, the addition project will be submitted as a
new project and the minimum investment must be more than thirty five percent (35%) of the
investment initially approved and completed. The extension of the tax exemption will be then
applied for a new period of ten (10) years, to the entire tourism activity of the company in the
project.

5.9.6. Exemption for ten (10) years from taxes of any kind applicable on the use of docks or
airports constructed by the company. These facilities can be used by the State, without cost.

5.9.7. For purposes of depreciation computation on real estate property, the Taxation and
Commercial Justice Law and its Regulations will apply.

5.10. For natural or juridical persons dedicated to activities for the development of National Folk
Art, the Recovery of Endangered Traditional Industries, and the production of Traditional Folk
Music, of Folk Dance Events and the production and sales of publications, manual arts works and
Tourism Promotional Material:

5.10.1. Exemption from import fees and taxes and from the General Tax on Values (I.G.V.), in the
acquisition of graphic materials and products and promotion leaflets for the promotion of tourism,
and of materials and equipment used exclusively for the production of crafts workshops, such as
kilns, carpentry equipment as well as for carving stone, sculptures, specialized equipment and
utensils in the production and use of traditional coaches and carts drawn by horses, the musical
equipment and instruments used exclusively for the production of folklore events and traditional
music, with the prior joint authorization from INTUR.

The exempted materials and equipment must be used in the production of said crafts and events,
and said exemption shall be granted if these articles are not produced, or are not produced in
sufficient quantity and quality in the country.

5.10.2. Exemption from General Tax on Value (I.G.V.), on the sale of handcrafted art made by
the artisan selling them, on sales by natural or juridical persons dedicated to traditional industries,
and by those exclusively dedicated to the sale and resale of national artisan hand made works,
when the unit price for the artisan making them or for the one reselling them is not over three
hundred dollars (US$300.00) or its equivalent in national currency with the condition that said
persons invest a minimum of Fifty Thousand dollars (US$50,000.00), or its equivalent in national
currency, in the installations, including the price of the land and buildings, expenses for
improvement of the property, and for the purchase of the initial inventory of crafts, or their
equivalent in national currency, for the creation of stores exclusively dedicated to the sale of
crafts.

This exemption from the General Tax on Value (I.G.V.) is also extended, without limit as to the
quoted price, to the production and rehabilitation of coaches and carts drawn by horses, and to
the production of other traditional industries approved by INTUR, and to the sale of traditional folk
musical events and folk dances by individual or groups of artists.

The period of exemption will be counted with respect to artisans and artists or groups of artists in
folkloric activities, as of the date in which said artisans, artists or groups registered in the
"Registry of Artisans and of Traditional Industries" and in the "Traditional Folk Music and Folk
Dance Registry" of INC, as per Regulations of this Law; and with respect to commercial centers
for artisan works, for a period of ten (10) years, as of the date that INTUR certifies that the initial
minimum investment requirement has been complied with and that the operation of the business
has begun. The exemption is conditional on the fact that no craftwork with an individual price of
over Three hundred dollars (US$300.00), or its equivalent in national currency is sold directly by
the artisan who made it or sold by a natural or juridical persons who is reselling it.

5.10.3. Exemption from the Real Estate Property Tax (I.B.I.) for a period of ten (10) years, as of
the date on which INTUR certifies that the project has been completed.

5.10.4. Exemption from the General Tax on Value (I.G.V.) applicable to services of
design/engineering and construction, and to services of production and distribution of graphic
products, publications and materials for the promotion of tourism, approved by INTUR.

5.10.5. Complete Exemption from Income Tax, as to the profits generated by their trade to
artisans, traditional industries shops, and musical and dance artists, for a period beginning from
the date of registration in the INC’s Registries; and partial exemption of eighty percent (80%) of
Income Tax, for persons and corporations dedicated to the business of sales of crafts, for a
period of ten (10) years, as of the date on which INTUR declared that said activity has begun
operations.

5.10.6. Non compliance on the part of the artisans who stop selling directly and exclusively their
own production or on the part of the businesses that sell artisan works and other non-Nicaraguan
articles not hand made, shall cause the immediate and permanent suspension of all granted
exemptions, as well as the definitive exclusion from the INC’s Artisan Registry; and other
possible sanctions under this Law and its Regulations.

Art. 6. The Executive Branch, through INTUR, may declare as "Tourism Planning and
Development Special Zones" (Z.E.P.D.T.) as per numerals 4.11.2 of Article 4 of this Law.

Among said zones, are those areas offering special conditions for the attraction of tourism, but
lacking the basic infrastructure for its development. In view of these considerations, these are
zones where strategic "national interest" projects for tourism, may benefit from additional
incentives.

Within those Special Zones, there are specific areas promoted by INTUR as per Master Plans and
Guides prepared jointly with INC and MARENA, to promote tourism in such areas designated as
sources of tourism development, either by the interest and urban/cultural/historical context, or
their natural/environmental/ecological context.

Finally, there are the Special Zones of a Specific character, which are those smaller territorial
areas, which merit special attention and treatment as a tourism resource.

To promote tourism with tourism projects, in said special zones, the following benefits will be
granted:

6.1. To lending institutions offering financing to corporations, which promote and operate tourism
projects located in the Z.E.P.D.T., which have been specifically approved by INTUR under the
present Law, are to be exemption from Income Tax, as to the interest earned during the existence
of the project.

6.2. To those natural or juridical persons, related or not, to the development or operation of
services and activities for tourism who invest their profits in the development of said Z.E.P.D.T.
zones, either in projects for tourism or through established financial mechanisms through
agreements and as per the guidelines and standards that MARENA and the Central Bank of
Nicaragua (BCN) in coordination with the General Banking Superintendent and other financial
institutions, will establish and develop jointly, such as Systems of Bonds and private financial
instruments, State loan guarantees, and capital funds for investment in Tourism, the total amount
of these investments will be treated and considered as a deductible credit from income tax. Also,
such natural or juridical persons may invest an amount, not larger than seventy (70) percent of
their total fiscal obligation as Income Tax, in the development of certain tourism projects located
in the Z.E.P.D.T., either in their own projects, or through the aforementioned financial
mechanisms.

CHAPTER IV
CONCESSIONS FROM THE STATE

Art. 7. The Executive Power is hereby authorized so that, as a product from INTUR, it can grant
for up to a period of twenty (20) years the concession of lots and islands that are the property of
the State without affecting the pre-existing rights: such as those lots that require landfills, and
which are intended for the development of tourism, as per the Master Plans for the Z.E.P.D.T. of
INTUR, of areas with tourism facilities that are the property of the State and/or of INTUR; and of
areas for the construction of marinas, docks and airports that the State decides to dedicate to the
public activity of tourism.

Art. 8. Notwithstanding the provisions of the preceding article, concession contracts may be
executed, in special cases, for up to a maximum period of fifty nine (59) years, when in the
criteria of INTUR’s Board of Directors, it pertains to projects whose investment amount,
economic impact, and job generating potential, require a contractual relation of a longer duration.

Art. 9. The non compliance with the stipulated time period to develop the tourist activity authorized
to the concessionaire, will produce the loss of the concession, in the understanding that any
improvement built within the area, shall become the property of the State, without cost to the
same, and without prejudice of other legal sanctions that may proceed.

Art. 10. Prior to the granting of the concession, a summary of the corresponding application must
be published, as a placard, through a written social communication medium of national circulation.
The Regulations of the current Law will establish the procedure.

In addition to what has been established in the preceding paragraph, the following requirements
must be complied with:

1) The budget assigned to the project, its technical specifications and the pertinent work schedule.

2) Payment of indemnity if necessary.

3) The modality of the services to be provided and its benefits to the users.

4) The financial capability of the applicant and the source of its resources.

5) The applicant’s experience in similar projects.

INTUR, jointly with the other responsible Entity, for granting the concession in dependence in
each specific case and in whatever is applicable, shall exercise a permanent inspection, in all the
stages of the concession of the area activity, and/or of the installations, in order to secure the
compliance of the contract.

Art.11. The concessionaire and in its case, his subcontractors, are obligated to comply with the
stipulated work schedule until the completion of the project. If they do not comply with the
schedule or the work is not completed in accordance to the technical specifications agreed-upon,
the administrative cancellation of the contract shall be declared, as well as the loss of the
compliance warranty bond submitted and of all the rights of the concession.

Art. 12. Those companies investing in the development of tourism and connected activities, in
areas or facilities granted by the State, will be granted the benefits and incentives under the
stipulated investment terms and conditions, except that the value of the land, will not be included
as part of the minimum investments which are a condition for eligibility.

CHAPTER V
CAPITAL FUNDS OF
INVESTMENT FOR TOURISM

Art. 13. The creation of Capital Funds for Investment in Tourism, which are private financial
institutions, under the regulatory control of the General Superintendent of Banks and of Other
Financial Institutions is permitted, so that they may participate, with investments, in the projects
that have been registered in the Investments Registry of INTUR.

Art. 14. Capital Tourism Investment Funds shall be authorized to receive private funds all kinds,
and said funds shall enjoy fiscal credit under this Law, and according to Regulations of
Investment Capital Funds of INTUR. The Mini, Small and Medium Tourism Entrepreneurs shall be
authorized to receive credits for the investment.

CHAPTER VI
INSCRIPTION AND REGISTRATION
OF INVESTMENTS

Art. 15. The Tourism Investment Registry, assigned to INTUR, in which natural or juridical
persons, who wish to qualify for the protection of the system of incentives to which this Law
refers, must register, is hereby created.

Art. 16. To apply for registration in the Tourism Investment Registry, applicants should present
the following documents:

1) An application form with the pertinent general information of the project, which is the object of
the application.

2) Personal and/or juridical Identification Document with respect to the applicant.

3) The complete documentation of the Project.

16.1. The form, sealed and numbered, will be purchased at INTUR at a cost of ten (10) dollars, or
its equivalent in national currency. This form, must be submitted in one original, and six( 6) copies
as first part of the application, shall contain the following information:

1) Names and Surnames, nationality, I.D. Card number or that of the passport, Number of the
Sole Contributor’s Register (RUC), domicile, telephone, and fax of the applicant person in
Nicaragua. In the case of a juridical person, the legal name, country of constitution of the
corporation and registration information in the Public Registry of his country of origin and in
Nicaragua, RUC number, as well as names, domicile, telephone and fax of their legal
representative in Nicaragua.

2) Name and municipal location of the project.

3) Amount of the investment.

4) Number of employment’s expected to be generated.

5) List of Documents submitted with the form, and which are parts of the application.

16.2 Personal identification documents and certifications to be submitted, in one original and two
(2) copies, with respect to the applicant, are the following:

1) Copy of the personal identification card or of the passport of the applicant, in the case of a
natural person; or a copy of the personal I.D. card, or of the passport of the legal representative,
in the case of a juridical person.

2) Articles of Incorporation of the corporation duly registered in the competent public registry, and
certification issued by the Secretary of the Board of Directors in which the duration that the
corporation has been in force and the names of the Directors, are thereby ascertained.

16.3. The application shall contain the following documents in original and six (6) copies, with
respect to the project:

1) A detailed and precise description of the intended tourism activity, including a location plan,
and other plans required and merited by the project, such as measurement plan, topographical
plan of the property, and the schedule and phases of completion.

2) Property title, and its registry history covering at least, a period of the last ten (10) years,
according to the Real Estate Registry. In case the applicant persons or corporation are not the
same as the owner of the property, it shall be necessary to provide at least a General Power of
Attorney.

3) A photocopy of the application for the location and land use submitted to the pertinent
municipality for the project’s proposed activity, or a document of approval if the same has been
issued.

4) Document of Evaluation of the Environmental Impact (E.I.A.) which shall be required for the
adjudication by MARENA and, as the case may be, of requiring or not, a complete and final
Declaration of Environmental Impact (D.I.A.), as required for the processing of the project.

5) Cost of the Project, and information and/or relevant evidence as to the financing of the same,
including those pertinent to the sources of financing. In the case of a Tourism Project with an
investment of over Two hundred thousand dollars (US$200,000.00), or its equivalent in national
currency, the application should contain a feasibility study of the project.

6) Any additional information that, in accordance with the nature of the proposed tourism activity,
will help INTUR’s evaluation of the application in all of its merits.

Art. 17. Having received the application form, with all the project’s required documentation,
INTUR must proceed, within sixty (60) calendar days, to consider the technical, economic, legal
and tourism merits aspects of the project submitted, and remit the documentation immediately to
the respective State entities, including MARENA, INC and others, as well as to the municipality
where the project is located, requesting from said entities a resolution indicating approval and/or
their opinion and recommendations regarding the project. Said resolution must be remitted by the
respective regulatory entities, to INTUR within thirty (30) days from the receipt date of the
project’s documents.

Art. 18. INTUR shall analyze the application, in the light of the recommendations and opinions
provided by the resolutions issued by the consulted entities and shall/or shall not approve the
application within an established period of sixty (60) days from the date of the application, issuing
a Resolution to that effect, and in case of an approval, it shall proceed to register the Project and
its proponent in the Tourism Investment Registry, and to issue a certification stating the date of
the registration in the Registry, and that therefore the person or corporation, enjoys and shall
enjoy the benefits established by this Law.

Art. 19. INTUR shall be the only agency in charge of approving or denying the registration of the
corporation in the Tourism Investment Registry for the purposes of this Law. Nevertheless, the
registration in said Registry does not exonerate the proponent of his obligation to comply with all
the requirements, and of obtaining the necessary and updated permits to effect the project and/or
each phase of execution, from the regulatory entities and of the corresponding jurisdictions, which
may be the same, or not, as those consulted by INTUR.

CHAPTER VII
OF THE OBLIGATIONS

Art. 20. Every person covered under the present Law will be obligated to:

1) Invest the stipulated amount in the respective application, for the proposed tourism project,
and maintain said investment for the minimum period that corresponds, in compliance of the
present Law.

2) Initiate the construction, renewal or restoration of the properties intended for the proposed
project, within a period not greater than six (6) months from the date of registration by INTUR in
the Tourism Investment Registry. INTUR may, under exceptional circumstances, extend said
term.

3) Initiate the operation of tourism activity within a period of not greater than three (3) years, from
the date of its registration in the Tourism Investment Registry.

4) To undertake the tourism activities in compliance with the regulatory standards of INTUR, and
those of INC and MARENA, whenever applicable.

5) To keep a faithful Inventory of the exempted articles, which must be made available to the
pertinent officers of INTUR and of the Ministry of the Treasury and Public Credit.

6) To post a compliance bond, in favor of INTUR, equivalent to six per thousand (0.006) of the
amount of the investment. This bond shall never be greater than One hundred fifty thousand
dollars (US$150,000.00), or its equivalent in national currency, and must remain current until
INTUR declares that the tourism activity has started operations.

7) Hire Nicaraguan personnel, excepting the specialized experts and technicians with the prior
authorization from the competent national authorities.

8) Provide specialized and continuous training, as per the demands of tourism, for Nicaraguan
citizens.

9) To submit disputes to the jurisdiction of national tribunals.

Art. 21. The incentives included in this Law shall be granted by INTUR through the execution of a
Tourism Contract of Investment and Promotion, which shall be submitted to the cognizance of the
Ministry of the Treasury and Public Credit.

The contract shall include the benefits, as well as the obligations and guarantees that correspond
to the applicant in each case.

Art. 22. INTUR shall proceed to stipulate the following regulations and other documents, which
shall be of strict compliance, according to the spirit of this Law, once the same is in force and
effect, in consensus with MARENA and INC, the Central Bank of Nicaragua, the Ministry of the
Treasury and Public Credit, these being the following:

1) Hostelry Regulations containing the program and regulations of Paradores.

2) Regulations pertaining to Historical Preservation Enclaves to be provided in consensus with
INC.

3) Food, Drink and Amusements Regulations containing the program and regulations of Mesones,
Casinos to be provided in consensus with the Ministry of Finance and Public Credit.

4) Registry of Artisans and Traditional Industries; Traditional Folk Music and Folk Dance Registry
in consensus with INC.

5) Plan of Tourism Development of the territory, including schedules for the Tourism Planning and
Development zones.

6) Concessions Regulations.

7) Capital Funds for Tourism Investment Regulation, in consensus with the Central Bank of
Nicaragua.

8) Regulations of the Law of Incentives of the Tourism Industry and of procedures for registration
in the Tourism Investment Registry. Tourism Investment Registry and a model of a Tourism
Contract for Investment and Promotion.

CHAPTER VIII
PENALTIES

Art. 23. The provisions established in the common Taxation Legislation shall apply in matters of
penalties.

Art. 24. Natural or Juridical Persons beneficiaries benefited according to the spirit of this Law and
which misuse the same, shall be subject to the penalties established by decree No. 839 "Law of
Fiscal Fraud Crime", with its reforms, included in Law No. 257, "Law of Taxation and Commercial
Justice".

Art. 25. The penalties provided in the preceding article shall be established and executed within the
regulations of the present Law.

CHAPTER IX
FINAL PROVISIONS

Art. 26. The Taxation Plans of the Municipalities shall be governed by the spirit of the present
Law, with the purpose of not burdening taxes on natural or juridical persons who have been
exempted from taxes. The National Police, as well, shall not be authorized to dictate standards
and regulations, perform collections, and/or establish regulations, that are damaging to the
providers of tourism services. Medium, Small and Mini-Tourism businesses shall make no direct
or indirect payments to the National Police.

Art. 27. The State shall take into consideration the indigenous reserves as tourism development
zones, and will promote folklore and its culture as tourist attractions.

Art. 28. Transitory. Authorization for natural or juridical persons under Decree 520, that have
initiated the construction of the proposed tourism activity, within the term provided and granted,
shall remain valid. Those person who have not initiated the construction, on the date of the
enactment of the present Law, shall have three (3) month from said date to initiate construction
of the proposed activity, in order to benefit from the incentives of decree 520. If they have not
started construction, they must submit a new application and comply with all the requirements of
the present Law. The companies protected under decree 520 that have started operations by the
date of effectiveness of the present Law, and that wish to make additional investments for an
extension of their installation and services, may also enjoy the incentives granted by the present
Law, if they comply with the conditions of the same and its Regulations. In such case, the
extension project shall be submitted as if it were a new project, and the minimum investment
must be thirty-five (35%) percent greater than the approved and completed initial investment. The
extension of the tax exemptions, for a new period of ten (10) years, shall be hence applicable to
the total tourism activity of the company in such project.

Art. 29. The present law abrogates Decree 520 dated August 5, 1960, and its amendments, and all
legal and regulatory provisions that are against it, in matters concerning hotels and amusements
centers.

Art. 30. The Executive Branch shall enact the Regulations for the present law, as established by
numeral 10 of Article 150 of the Political Constitution of the Republic of Nicaragua.

Art. 31. The present Law shall become effective as of its publications in La Gaceta, Official
Daily.

Issued in the city of Managua, in the Meeting Room of the National Assembly, on the eighteenth
day of the month of May, nineteen hundred ninety nine. IVAN ESCOBAR FORNOS, President of
the National Assembly. VICTOR MANUEL TALAVERA HUETE, Secretary of the National
Assembly.

Therefore: Be it considered as a Law of the Republic. Be it published and executed.

ARNOLDO ALEMAN LACAYO,
President of the Republic of Nicaragua.

For all legal purposes pertaining to Law Nº. 306, as promulgate by the National Assembly of the
Republic of Nicaragua, please refer to the original published version as it appears in La Gaceta,
Diario Oficial, of June 21, 1999.