Tax in Honduras

Who is the tax authority and where do filings live?

Servicio de Administracion de Rentas (SAR), an autonomous agency under the Ministerio de Finanzas, is Honduras's tax authority [SC1]. Customs is administered jointly with SAR. Filings flow through eSAR online services. SAR operates through specialised offices for Grandes Contribuyentes and regional administrations. Tax disputes proceed through SAR internal review (recurso de reposicion), the Tribunal Tributario Nacional, and the Corte Suprema de Justicia for cassation. The credentialed Honduran tax-and-accounting professions are Contador Publico regulated by the Colegio de Peritos Mercantiles y Contadores Publicos de Honduras. Substantive law: Decreto 25-1963 (Income Tax Law as amended), Decreto 24-1963 (Sales Tax Law as amended), Codigo Tributario (Decreto 22-97), Decreto 17-2010 (Strengthening of Public Finances), and successive amendments under Decretos. Honduras is a member of the Central American Integration System (SICA) and the Central American Common Market (CACM).

What is the tax year and when are returns due?

The individual tax year is the calendar year. Personal income tax returns are due 30 April of the year following the tax year [SC1]. Wage earners' income tax is fully withheld monthly by employers. Corporate fiscal years align with the calendar year (with limited exception); annual ISR returns are due 30 April. Quarterly advance payments apply for taxpayers above thresholds. ISV returns are filed monthly by the 10th of the following month under the standard regime. Withholding tax (WHT) returns are monthly. The IAN (Impuesto al Activo Neto) is calculated annually with quarterly instalments. The Comprobantes Fiscales Electronicos (CFE) framework has been progressively expanded since 2014. Annual financial statements are required for in-scope corporations.

Who is a Honduran tax resident?

Under the Codigo Tributario, an individual is tax resident in Honduras if (a) physically present in Honduras for more than three consecutive months or for more than six months in a calendar year, OR (b) maintaining their main centre of business or economic interests in Honduras [SC2]. Residency does not affect the underlying territorial-source taxation principle: residents and non-residents alike are taxed only on Honduran-source income (with limited exceptions for resident citizens). Treaty residents may benefit from reduced withholding. The 'three consecutive months' provision is unusual among Latin American peers and creates a relatively low threshold for residency-acquisition by extended-stay visitors. PE attribution under Honduras's nascent treaty network and domestic Codigo Tributario follows OECD Model definitions. Tax Residency Certificate procedure under SAR provides foreign-residency-certificate counterparts.

What are the personal income tax rates?

For 2024, the personal income tax brackets are: 0 percent up to HNL 199,039.47 of annual taxable income; 15 percent on HNL 199,039.48-303,499.90; 20 percent on HNL 303,499.91-705,813.76; and 25 percent above HNL 705,813.76 [SC1]. Personal allowance HNL 40,000 standard plus HNL 700/month for medical and educational expenses. Mandatory social security (Instituto Hondureno de Seguridad Social, IHSS) and FOSOVI/RAP/INFOP contributions apply. Investment income (interest from financial institutions to residents) faces 10 percent withholding. Capital gains face 10 percent flat under specific provisions. Salaried employees have most obligations satisfied through monthly employer-side withholding. Self-employed individuals face the same progressive rate structure with annual return-and-reconciliation. Specific deductions include qualifying medical expenses, educational expenses, and certain other categories.

How does Honduras's corporate tax work?

The corporate income tax (Impuesto sobre la Renta, ISR) rate is 25 percent on Honduran-source taxable profit, plus a 5 percent solidarity surcharge (Aportacion Solidaria) on net taxable income above HNL 1,000,000 — effective 30 percent on income above the threshold [SC2]. The 1.5 percent minimum tax (Impuesto al Activo Neto, IAN) applies on net assets above HNL 3,000,000 (creditable against ISR) — operating as effective minimum tax floor. Withholding tax on dividends to non-residents is 10 percent (treaty rates apply); royalties 25 percent default; technical-services 25 percent default; interest 10-25 percent depending on counterparty class. Pillar Two implementation has not yet been transposed; in-scope MNE groups should monitor for legislative developments. Tax loss carryforwards: 3 years for industrial sector (specific conditions); not generally available; carryback unavailable. ZOLI (Zonas Libres de Industrializacion y Comercio) and ZADE (Zonas Agricolas de Exportacion) provide tax holidays for licensed export-oriented operations. Transfer pricing under successive Decretos follows OECD principles.

What about ISV (Sales Tax)?

The standard ISV rate is 15 percent under Decreto 24-1963 (the Honduran sales tax operates on a VAT-style invoice-credit mechanism though formally titled Sales Tax) [SC3]. Higher rate of 18 percent applies on alcoholic beverages, tobacco products, and specified luxury goods. Zero-rated supplies include exports of goods and services. Exempt supplies include healthcare, education, financial services (under specific definitions), residential rental, basic foodstuffs (under specific definitions), and several other social-policy categories. Registration is required regardless of turnover for businesses subject to ISV. Reverse-charge mechanism applies on imported services. Foreign-supplier registration for B2C cross-border digital services applies under successive amendments. The Comprobantes Fiscales Electronicos (CFE) framework has been progressively expanded since 2014. Excise Duty applies on specified luxuries. Customs-ISV on imports collected at the border. Bad-debt ISV relief is available under specific conditions.

How are cryptoassets taxed?

Honduras has not enacted dedicated cryptoasset taxation. Banco Central de Honduras (BCH) issued Resolucion No. 215-7/2022 stating cryptoassets are not legal tender and are not regulated as financial instruments [SC2]. The 2022-2023 fiscal landscape saw the establishment of Prospera ZEDE (Honduras's special economic zone before 2022 ZEDE-law repeal) as a dedicated cryptoasset-friendly jurisdiction with parallel regulatory framework, though the broader ZEDE framework has been progressively unwound under successive Decreto modifications under the post-2022 Castro administration. SAR has not issued cryptoasset tax guidance; declared cryptoasset gains by individuals fall under existing income-tax categories at applicable progressive rates. Mining and staking are business income at corporate rates. NFTs and stablecoins fall under the same case-by-case treatment. The post-ZEDE-repeal regulatory environment is in flux pending dedicated framework legislation.

What is the treaty network and what are the audit triggers?

Honduras has a very limited tax treaty network with no in-force comprehensive double tax treaties as of late 2024 (Honduras has signed but not ratified some) [SC4]. Honduras has not yet signed the OECD MLI. Honduras is a CACM/SICA member. Audit triggers include: disproportionate ISV credits relative to declared output; transfer-pricing non-compliance under successive Decretos transposing OECD principles; undeclared bank deposits flagged via expanding CRS exchanges (Honduras adopted CRS framework under successive amendments); withholding-tax under-collection by withholding agents; and the Aportacion Solidaria 30-percent-effective-rate compliance regime for high-income corporates. Standard SOL is 5 years from filing deadline; 7 years where return was not filed; 10 years for fraud.

What are the common penalties and pitfalls for foreigners?

The Honduran penalty framework under the Codigo Tributario imposes administrative-fine sanctions for late filings (escalating fixed penalty plus default interest), failure to file (escalating penalty plus assessment-by-SAR-estimate exposure), incorrect declarations (50-100 percent of underreported tax depending on intent), and failure to maintain accounting records (escalating administrative fine plus assessment-by-SAR-estimate exposure) [SC5]. Default interest accrues at the prevailing rate plus statutory margin on unpaid tax. Tax-evasion criminal exposure under specific provisions carries fines and imprisonment for grossly-significant evasion. Common foreign-national pitfalls: (1) the 'three consecutive months' residency provision creates a low threshold for residency-acquisition; (2) the territorial-source taxation principle creates planning opportunities; (3) the Aportacion Solidaria 5 percent surcharge above HNL 1m creates effective 30 percent rate for high-income corporates; (4) IAN at 1.5 percent on net assets operates as effective minimum tax floor; (5) the limited treaty network means most cross-border flows face full domestic withholding rates without treaty relief; (6) Pillar Two has not yet been transposed but in-scope MNE groups should monitor for developments; (7) ZEDE framework has been progressively unwound — businesses operating under ZEDE-derived structures need to track regulatory developments; (8) CFE Comprobantes Fiscales Electronicos mandatory invoicing creates compliance overhead; (9) cryptocurrency activity remains in regulatory ambiguity post-ZEDE-repeal; and (10) tax loss carryforward is limited to industrial-sector specific cases — most businesses face full immediate-loss-recognition without carryforward relief.