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10. INCENTIVES AND SPECIAL REGIMES

Incentives and benefits available to companies under special regime are given below:

  • Export Processing Zone (‘EPZ’) can be established anywhere in the country and companies operating in EPZ are eligible for the following benefits:
    • Exemption from import duties and other charges on goods and capital equipment;
    • Exemption from state and municipal income taxes and corporate tax (‘CIT’) for the first 10 years of operation;
    • Repatriation of its profits and capital without any restrictions;
  • Companies operating in Free Zones are eligible for the following benefits:
    • CIT Exemption in respect of profits derived from sales to foreign countries for the next 10 years after approval has been granted by the Ministry of Economy and Commerce;
    • Exemption from Income tax instalment for up to 20 years;
    • Municipal income tax exemption for a period of 10 years;
  • Companies engaged in the generation of electric energy by utilizing renewable resources are eligible for CIT, VAT, and import duty exemptions for a period of 10 years, subject to certain conditions;
  • Under Temporary Import Regime: Qualified companies, operating outside EPZ, are allowed to import raw materials, parts and capital equipment (except vehicles) in the country without any surcharge and customs duties provided such input is used in producing finished products for export (up to 5% of the finished product can be sold locally). However, they are liable to pay CIT and municipal income tax;
  • The Tourism Promotion Law provides tax exemptions for national and international investment in tourism development projects in the country. To claim the benefits the tourism business is required to be located in the designated tourism zone in order to qualify for tax exemptions and duty-free status. Restaurants, casinos, nightclubs and movie theatres and certain other businesses are not eligible for incentives under this law. Following incentives are available:
    • Exemption from CIT, net asset tax, and solidarity contribution for the first 15 years of the project. Exemption from import duties, selective consumption and tariffs tax and other custom duties for tourism projects for up to 10 years;
    • Sales tax exemption on local purchases of goods and services which are directly linked to qualified tourism investments for up to 10 years.

Other Incentives

Companies that import semi-manufactured materials for assembly in Honduras and export the finished products are eligible for duty-free imports of raw materials and machinery for use in making manufactured products for exports.

COVID-19 Emergency Measures

In response to the COVID-19 pandemic, Honduras granted an additional 10% expense deduction for payroll for employers that retain the same number of employees.