Honduras

Taxable income is determined in accordance with generally accepted accounting principles and commercial accounting standards, subject to the adjustments and limitations established under Honduran tax legislation.

Inventory valuation

Inventory is generally valued using the first-in, first-out (FIFO), last-in, first-out (LIFO), or weighted-average cost methods.

Capital gains

Capital gains are not generally subject to CIT but may be subject to capital gains tax. See Capital gains tax in the Other taxes section for more information.

Dividend income

Dividend income is treated as a separate category of income and is therefore not subject to the ordinary CIT rates.

Dividends distributed to resident individuals or entities are subject to a 10% WHT.

The same 10% WHT applies to dividends paid to non-residents. Dividends or profit distributions that have already been subject to the applicable dividend WHT are not subject to further taxation upon subsequent redistribution.

Stock dividends

As a general rule, stock dividends are not taxable when they constitute a capitalisation of earnings or reserves. Nevertheless, the tax treatment should be evaluated on a case-by-case basis, taking into account the specific facts and circumstances of each transaction.

Interest income

Honduran Bank interests are subject to a 10% WHT at the moment the interest is given, when the sum is over HNL 50,000. Interests from abroad are considered as other income. For income tax reconciliation, interest income is considered non-taxable when subject to the 10% WHT.

Royalty income

Royalties are taxed as ordinary income when received by a local company or branch operating in Honduras. Where the recipient is a non‑resident, royalties are subject to WHT at source at a rate of 25% on the gross amount.

Foreign income

Deferral and anti-deferral of foreign income are not regulated in Honduras.