Please direct all inquiries regarding Honduras to the persons listed below in the San José, Costa Rica, office of EY. All engagements are coordinated by the San José, Costa Rica, office.
San Pedro Sula GMT -6
EY
Boulevard Armenta, Km. 2, N.O.
Altia Business Park Tower 1
San Pedro Sula Honduras
+504 2580-7921
Fax: +504 2580-8007
Tegucigalpa GMT -6
EY +504 2232-9100
Avenida La Pazv
Centro Corporativo Los Próceres Tower 1 Tegucigalpa Honduras
Principal Tax Contact
Rafael Sayagués
Fax: +504 2232-9102
+506 2208-9880 (resident in San José, New York: +1 (212) 773-4761 Costa Rica) Costa Rica Mobile: +506 8830-5043
US Mobile: +1 (646) 283-3979
Efax: +1 (866) 366-7167
Email: rafael.sayagues@cr.ey.com
Business Tax Services
Lisa María Gattulli
+506 2208-9861 (resident in San José, Mobile: +506 8844-6778 Costa Rica)
Email: lisa.gattulli@cr.ey.com
International Tax and Transaction Services – International Corporate Tax Advisory
Juan Carlos Chavarría
+506 2208-9844 (resident in San José, Mobile: +506 8913-6686 Costa Rica)
International Mobile: +1 (239) 961-5947
Email: juan-carlos.chavarria@cr.ey.com
Rafael Sayagués
+506 2208-9880 (resident in San José, New York: +1 (212) 773-4761 Costa Rica)
Costa Rica Mobile: +506 8830-5043
US Mobile: +1 (646) 283-3979
Efax: +1 (866) 366-7167
Email: rafael.sayagues@cr.ey.com
International Tax and Transaction Services – Transfer Pricing
Luis Eduardo Ocando B.
+507 208-0144 (resident in Panama)
Panama Mobile: +507 6747-1221
US Mobile: +1 (305) 924-2115
Fax: +507 214-4300
Email: luis.ocando@pa.ey.com
Paul de Haan (resident in +506 2208-9800 San José, Costa Rica)
Email: paul.dehaan@cr.ey.com
Business Tax Advisory
Juan Carlos Chavarría +506 2208-9844 (resident in San José, Mobile: +506 8913-6686 Costa Rica)
International Mobile: +1 (239) 961-5947 Email: juan-carlos.chavarria@cr.ey.com
Tax Policy and Controversy
Rafael Sayagués
+506 2208-9880 (resident in San José, New York: +1 (212) 773-4761 Costa Rica) Costa Rica Mobile: +506 8830-5043
US Mobile: +1 (646) 283-3979
Efax: +1 (866) 366-7167 Email: rafael.sayagues@cr.ey.com
Global Compliance and Reporting
Lisa María Gattulli
+506 2208-9861 (resident in San José, Mobile: +506 8844-6778 Costa Rica) Email: lisa.gattulli@cr.ey.com
International Tax and Transaction Services – Transaction Tax Advisory
Antonio Ruiz +506 2208-9822 (resident in San José, Mobile: +506 8890-9391 Costa Rica) International Mobile: +1 (239) 298-6372 Email: antonio.ruiz@cr.ey.com
Rafael Sayagués +506 2208-9880 (resident in San José, New York: +1 (212) 773-4761 Costa Rica) Costa Rica Mobile: +506 8830-5043 US Mobile: +1 (646) 283-3979 Efax: +1 (866) 366-7167 Email: rafael.sayagues@cr.ey.com
People Advisory Services
Lisa María Gattulli
+506 2208-9861 (resident in San José, Mobile: +506 8844-6778 Costa Rica) Email: lisa.gattulli@cr.ey.com
A. At a glance
(a) An alternate minimum income tax and asset tax are also imposed (see Section B). A Social Contribution Tax is imposed at a rate of 5% on compa nies with net income exceeding HNL1 million. Domiciled entities that have reported operating losses in two consecutive or alternate tax periods that are still open for examination are also subject to advance income tax (AIT) pay ments that are computed at a rate of 1% of gross income equal to or greater than HNL100 million. The AIT may be credited against the annual corporate income tax, asset tax or the Social Contribution Tax. Branches of foreign companies dedicated to air, land and maritime transport pay the corporate income tax rate of 25% on an amount of net taxable income equal to 3% of their Honduran-source gross income.
(b) Withholding taxes are imposed on payments to nonresident companies and individuals.
(c) This withholding tax applies to payments for films and video tapes for movies, television, video clubs and cable television.
(d) Only companies engaged in agriculture, manufacturing, mining and tourism may carry forward net operating losses.
B. Taxes on corporate income and gains
Corporate income tax. Honduran-resident companies (that is, those incorporated in Honduras) are no longer taxed on their worldwide income. Effective from 1 January 2017, only their Honduran-source income is subject to Honduran tax. Nonresident companies are subject to income tax only on income derived from Honduran sources.
Corporate income tax rates. Companies are subject to corporate income tax at a rate of 25% on their net income.
A Social Contribution Tax of 5% applies to companies with net income exceeding HNL1 million.
A 1% income tax installment applies to taxpayers that meet the following conditions:
• During open tax periods, they have reported operating losses in two consecutive or alternate tax periods.
• In the prior tax period, they derived gross income equal to or greater than HNL100 million.
The installment equals 1% of the gross income reported.
The income tax installment is a tax credit that may be applied against income tax, asset tax or the Social Contribution Tax on the filing of the year-end tax return.
The following taxpayers are not subject to the income tax install ment:
• Individuals or entities in the preoperative phase, up to a maxi mum of five years.
• Companies and individuals that incur losses resulting from an act of God or force majeure. This loss needs to be certified by an audit firm registered with the respective accounting associa tion, notwithstanding a subsequent examination by the tax au thorities.
• Companies engaged in agriculture, manufacturing, mining and tourism and individuals authorized by the tax authorities to carry forward losses in accordance to Section 20 of the Honduran Income Tax Law (HN ITL).
• Companies and individuals that calculated and paid tax in the prior tax period and are subject to income tax installments in accordance to Section 34 of the HN ITL.
• Companies and individuals that prove through a tax audit re port, carried out by an audit firm registered with the respective accounting association, that the tax loss is real, subject to veri fication from the tax authorities.
• Companies and individuals established under Section 7 of the HN ITL and tax-exempt by law or Special Legislative Decrees.
Companies operating under the following special regimes are exempt from income tax, sales tax, customs duties and certain municipal taxes:
• Free Trade Zone (Zonas Libres, or ZOLI)
• Temporary Import Regime (Régimen de Importación Temporal, or RIT)
• Free Tourist Zone (Zona Libre Turística, or ZOLITUR)
• Call Centers
Alternative minimum income tax. An alternative minimum income tax (AMT) applies to resident individuals and corpora tions.
For 2020 and future years, the AMT applies to annual gross income greater than HNL1 billion at a rate of 1% (0.5% for tax payers in special sectors).
The minimum income tax rate is reduced to 0.75% of gross in come for individuals or legal entities producing or selling the following products or services:
• Cement production and distribution
• Public utility services provided by state-owned companies
• Products and medicines for human use (at the importation and production levels)
• Bakery-related products
• Production, distribution or marketing of steel products for con struction purposes, excluding the sale of scrap metal or the activity of the mining industry
• Production, marketing or export of coffee
Asset tax. An asset tax is assessed based on net assets (as defined in the law) reported in the company’s balance sheet. Specific rules apply to compute the tax for financial institutions, insur ance companies and holding companies. The asset tax rate is 1%. Income tax may be credited against asset tax. If the income tax equals or exceeds the asset tax for the tax year, no asset tax is due. If the income tax is less than the asset tax, the difference is payable as asset tax. In such circumstances, the asset tax repre sents a minimum tax for the year.
Financial transaction tax. A financial transaction tax applies to local and foreign currency operations carried on in either nation al or foreign currency within the institutions of the national bank ing system, including the following:
• National Bank for Agricultural Development (Banco Nacional de Desarrollo Agrícola, or BANADESA)
• Financial entities
• Representation offices that are supervised by the National Commission on Banking and Insurance (Comisión Nacional de Bancos y Seguros, or CNBS)
The financial transaction tax applies to the following transac tions:
• Debits (withdrawals) from at-sight deposits and checking accounts, carried out by the institutions referred to in the pre ceding paragraph (the financial institutions).
• Debits (withdrawals) of deposits from saving accounts, carried out by the financial institutions.
• Loan operations granted by the financial institutions that need to be absorbed by the lender. The contribution under the financial transaction tax applies only to disbursements and not to payments received by the financial institution. The CNBS must ensure that this special contribution is not transferred to the borrower.
• Issuance of cashier’s checks, certified checks, traveler’s checks and other similar existing financial instruments by financial in stitutions, or financial instruments to be created in the future, if they are issued without using the accounts mentioned in the first two bullets above.
• Payments or transfers in favor of third parties of money recov ered or collected in the name of such parties that are carried out by the financial institutions without using the accounts men tioned in the first two bullets above.
• Transfers or money remittances abroad or locally, carried out through the financial institutions, without using the accounts mentioned in the first two bullets above.
• Credit card annual membership renewals, for the principal card holder only.
The following are the amounts of the contributions required under the financial transaction tax for the first, second, fourth, fifth and sixth categories of transactions listed above:
• First, second, fifth and sixth categories listed above: HNL2 per thousand or fraction of a thousand
• Fourth category: HNL1.50 per thousand or fraction of a thou sand
The contributions for the transactions in the seventh (last) cate gory above
table.
Credit line
The law does not establish
for the third category.
subject to tax at a rate of 10%.
gain generated from any type of transfer of assets or rights by a person whose
assets or
not involve commercializing
capital gain.
uras
However, if the asset being transferred is part of the ordinary course of business of the transferor (for example, the transferor ordinarily or habitually engages in the trade or business of selling shares), the gains are categorized as ordinary income subject to corporate income tax at a rate of 25%.
Capital losses are deductible only if derived from the sale of depreciable assets or from the sale of non-depreciable assets sold in the ordinary course of a trade or business.
The capital gain must be reported and the corresponding tax paid for each transaction within 10 working days following the date on which the payment is received by the seller. An annual return must also be filed by 30 April of each year.
For the transfer of immovable property or rights and securities carried out with a nonresident, the buyer must withhold 4% of the transfer value. The capital gains tax is deemed to constitute a credit to such tax for the seller. The tax withheld must be re ported in a filing and paid by the buyer within 10 calendar days following the date of the transaction.
Administration. The regular statutory tax year runs from 1 January through 31 December. However, taxpayers may elect a different tax year by requesting an authorization from the tax authorities. Companies with a regular statutory tax year must file an annual income tax return and pay any corresponding tax due within 120 days after the end of the tax year. For companies with a dif ferent tax year, the filing and payment deadline is 90 days after the end of their tax year. Mandatory advance tax payments are payable each quarter based on the income tax liability for the preceding tax year.
Dividends. A 10% withholding tax is imposed on dividends. Foreign tax relief. Honduras does not grant any relief for foreign taxes paid.
C. Determination of taxable income
General. Net taxable income is computed in accordance with generally accepted accounting and commercial principles, subject to certain adjustments required by the Honduran income tax law.
Inventories. Inventories are valued using the first-in, first-out (FIFO), last-in, first-out (LIFO) or weighted average cost methods.
Provisions. Provisions for contingent liabilities, such as sever ance pay, are not deductible for tax purposes. However, payments of such liabilities are deductible expenses.
Tax depreciation. Depreciation may be computed using the straightline method. Companies may obtain authorization from the tax authorities to use other depreciation methods. However, after a company selects a depreciation method, the method must be applied consistently thereafter. The following are the applicable straight-line method rates for some common assets.
Asset Rate (%)
Buildings 2.5 to 10
Plant and machinery 10 Vehicles 10 to 33
Furniture and office equipment 10 Tools 25
Relief for losses. Companies engaged in agriculture, manufactur ing, mining and tourism may carry forward net operating losses for three years. However, certain restrictions apply. Net operating losses may not be carried back.
Groups of companies. Honduran law does not allow the filing of consolidated income tax returns or provide any other tax relief to consolidated groups of companies.
D. Other significant taxes
The following table summarizes other significant taxes.
Nature of tax Rate (%)
Sales tax
General rate 15
Special Tax Rate for alcoholic beverages, cigarettes and business class tickets for air travel 18
Customs duties 1 to 20
Payroll taxes; paid by employers; average rate 8.5
Municipal taxes
Property tax; imposed on companies owning real estate Various Industry trade and service municipal tax; imposed monthly on income derived from the operations of companies; rates vary according to the annual production volume, income or sales
Up to HNL500,000 0.030
From HNL500,000 to HNL10,000,000 0.040
From HNL10,000,000 to HNL20,000,000 0.030
From HNL20,000,000 to HNL30,000,000 0.020
Over HNL30,000,000 0.015
E. Foreign-exchange controls
The Honduran currency is the lempira (HNL). As of 25 January 2022, the exchange rate for the lempira is HNL24.64 = USD1.
No restrictions are imposed on foreign-trade operations or foreign currency transactions.
F. Tax treaties
Honduras has not entered into any income tax treaties with other countries.