Honduras

Sales tax is levied on the sale and purchase of goods and services carried out within Honduran territory.

The standard sales tax rate is 15%, which applies to most goods and services. However, certain items are exempt, including machinery and equipment, basic grains, pharmaceutical products, raw materials used in the production of non-taxable goods, petroleum products, school supplies, and insecticides, among others.

The importation and sale of beer, other alcoholic beverages, cigarettes, and other tobacco products are subject to a 18% sales tax.

A 15% sales tax applies to certain PCS, cellular, broadband internet, cable television, and energy services, depending on the level of consumption billed by the service provider.

An 18% sales tax is levied on first-class and business-class airline tickets.

Customs duties assessed by the Honduran government at the time of importation generally range from 0% to 15% for most goods.

Honduras is a member of the Central American Common Market (CACM), together with Costa Rica, El Salvador, Guatemala, and Nicaragua. As a result, Honduras applies tariff rates of 0% to 15% on most goods imported from outside the CACM. Under the Dominican Republic–Central America Free Trade Agreement (CAFTA-DR) with the United States, approximately 80% of U.S. industrial and commercial goods may enter the region duty-free, with the remaining tariffs scheduled to be eliminated over a ten-year period. In addition, nearly all textile and apparel products that comply with the agreement’s rules of origin are both duty-free and quota-free, fostering opportunities for U.S. and regional fiber, yarn, fabric, and apparel manufacturing. Notably, CAFTA-DR tariff treatment for textile and apparel goods was applied retroactively as of January 1, 2004.

To determine whether a specific product qualifies for duty-free treatment under CAFTA-DR, it is necessary to first identify the appropriate Harmonized System (HS) classification. Once the HS code is established, the applicable country- and product-specific tariff elimination schedule can be reviewed.

Ad valorem import duties may reach up to 20%. In addition, imports are subject to sales tax at a rate of 15% or 18%, calculated on the aggregate of the cost, insurance, and freight (CIF) value, the applicable ad valorem duty, and any customs fees.

The net assets tax is an annual tax of 1% levied on a company’s net asset value. The tax base is calculated on the gross value of assets, reduced by reserves for accounts payable, accumulated depreciation allowed under the Income Tax Law, and any other deductions permitted by law. In addition, the legislation provides for a special deduction of L 3 million.

The net assets tax applies in lieu of Corporate Income Tax (CIT) when the amount of CIT payable is lower than the net assets tax due. Resident companies in their pre-operational period that is, the period in which the company has commenced operations but has not yet issued its first invoice as well as companies operating in free trade zones (FTZs), among others, are exempt from this tax.

Non-resident companies are not subject to the net assets tax.

Payroll taxes and social security contributions are paid by employers at the following rates:

Social security contributions are assessed as follows:

• Sickness and maternity: Employer contribution of 2.5% on employee income, subject to a maximum monthly contribution base of L 11,903.13.
• Invalidity, old age, and death: Employer contribution of 1% on employee income, subject to a maximum monthly contribution base of L 11,903.13.
• Occupational risk: Employer contribution of 0.2% on employee income, subject to a maximum monthly contribution base of L 11,903.13.
• Institute of Professional Education (Instituto Nacional de Formación Profesional – INFOP): Employer contribution of 1% calculated on total accrued payroll.
• Housing fund (Régimen de Aportaciones Privadas – RAP / Fondo Social para la Vivienda – FOSOVI): Contribution of 1.5% of the employee’s ordinary salary paid by the employer, plus 1.5% withheld from the employee’s salary, calculated on a contribution base capped at L 11,903.13.

Under the Special Temporary Security Contribution on Financial Transactions (Contribución Especial por Transacciones Financieras Proseguridad Poblacional), financial transactions are subject to a contribution of L 2.00 per thousand, or fraction thereof, subject to certain exceptions. 

Companies providing mobile communication services are required to pay a special temporary contribution of 1% on gross monthly income.

Under the special temporary environmental protection contribution applicable to the mining sector, a 2% levy is imposed on the free on board (FOB) value of exports.

The special temporary contribution applicable to the food and beverage sector operating under special tax regimes is 0.5% of gross monthly income.

Finally, cooperatives are subject to a special contribution of 3.6% on annual net surplus.

Companies operating in Honduras are also subject to the rules and regulations of the respective municipalities in which they conduct business. Municipal taxes and obligations are governed by the Municipal Tax Ordinance, which establishes the applicable local taxes, fees, and charges.

Key municipal tax obligations typically include the following:

• Industry, commerce, and services tax, generally calculated on the basis of annual gross income (see the Taxes on Corporate Income section).
• Public services fee, payable for municipal services such as waste collection and disposal.
• Real estate tax, levied on the ownership of urban and rural real estate.
• Sign tax, imposed on outdoor advertising and public signage.