Under the zona-franca regime, Nicaragua has built Central America’s nearshore manufacturing base — apparel and automotive wire harnesses for the US market, made duty-free, close to port, and at competitive cost. It is the country’s second-largest export channel after merchandise, and the one most directly exposed to a shifting trade map.
Free-zone exports, 2024
Sector profiles, 2025
Apparel & textiles · largest share of zone exports
Sector data, 2024
Apparel jobs · the regime’s largest employer
CNZF
Income-tax exemption, first 10–15 years (Law 917)
Law No. 917
Nicaragua’s free-zone, or zona franca, regime is the country’s industrial export engine. Apparel and textiles are the anchor — more than half of zone shipments and, at roughly 70,000 jobs, the single largest employer in the regime. The fast-growing second sector is automotive wire harnesses, around a sixth of zone exports, riding the same global supply-chain nearshoring that favours suppliers close to the US market. Agro-processing, tobacco and a small services segment round out a base that shipped close to $2 billion in 2024.
The draw is the incentive structure. Under Law No. 917, free-zone operators receive full exemption from income tax for their first ten years — up to fifteen in some cases — alongside exemptions from VAT, import duties and municipal taxes, and free importation of machinery, raw materials and spare parts. A new Special Economic Zones framework introduced in late 2025 broadens the model beyond strictly export-oriented activity, and a free-trade agreement with China, in force since 2024, adds tariff-free access to a second large market alongside the United States.
For a manufacturer, the proposition is proximity plus cost. Nicaragua sits within easy shipping reach of the United States, with a competitive cost structure, a young workforce, and labour-market characteristics — low turnover, a fast learning curve — that have kept established apparel brands in the country for years. Wire harnesses, a precision-assembly business tied to automotive demand, illustrate the move up from basic cut-and-sew toward higher-value light manufacturing.
The exposure is equally plain, and it is concentrated in one direction. The overwhelming majority of zone output ships to the United States, and a new US tariff — currently the highest applied to any Central American country — took effect in 2025, with Nicaragua’s CAFTA-DR treatment under review. The China agreement and the new zone framework are the diversification responses; the operators best positioned will be those that broaden their markets while holding the cost and proximity advantages that built the base.
Free-zone manufacturing is reported as job counts and tax holidays, and rarely framed as the nearshore platform it is — a duty-free, proximity-driven base at a moment when supply chains are actively relocating. A credible commercial platform can present it that way to the manufacturers and counterparties weighing where to site next, and Nicaragua.com is the natural address for it.
The trade map is being redrawn from both sides — a new US tariff and a CAFTA-DR review on one, a new China agreement and a Special Economic Zones framework on the other. The window to position around a shifting access-and-incentive map is open now, while global supply chains are still choosing where to land.
Free-zone operators receive full income-tax exemption for their first 10–15 years under Law 917 — now extended by a new Special Economic Zones framework.
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