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Taxes in Honduras
Honduras Offers Tax Incentives
In 1992, the Honduran government created investment incentives for tourism projects in the Bay Islands, La Ceiba, Trujillo, Tela, and Copan. It decided that tourism could be expanded to bring in much-needed revenue. As a result, legislators wrote new laws to lure foreigners to invest in the country.
As a result of these new laws, you’ll pay no income tax for 20 years on profits made from a government-approved tourism project. Even if you make $10 million, you will not pay a penny to the Honduran government in taxes. You’ll be exempt from the local 12% sales tax (on wood and other building materials, for example). You will simply pay a 1% asset tax, on the capital registered, after two years of being in business.
Your project can be as small as a one-bedroom B&B or as large as a 100-room beach resort. It can be virtually any tourism-related project, such as a restaurant, club, café, or souvenir shop. Practically anything that will support the tourism industry can qualify. In addition to benefiting from the income-tax holiday and the sales-tax exemption, you will be able to bring in all construction materials, equipment, machinery, spare parts, sports equipment--anything you need to put a government-approved tourism project into operation--duty free. Since taxes and tariffs normally range from 5% to 120%, you can figure you’ll save an average of at least 20% for extra costs.
To apply for government approval, you will need to present the following documents:
• Corporation papers
• A power of attorney
• A copy of your land survey
• Title to the land
• A set of plans for development.
For a tourism-development project, you will also need a feasibility study and an environmental impact study. Once you receive approval, you will get, in effect, a duty-free license to do business. But you’ll need help to get the paperwork done. It can take a year or more to get approval. While your papers are being processed, you will want to bring in your vehicles, supplies, and so forth. Customs law allows you to ask for a 180-day temporary permit--which can be extended, if necessary--while your residency card and paperwork are being processed. How much will it cost you to get your project approved as an official tourism project? Charges will probably run as high as 5% to 10% of your total investment. Financing is available in dollars at 12% to 13% through the local banking system.