The Law for the Promotion of Tourism replaced the traditional ZOLITUR Law which had provided ample tax benefits to tourism projects for over a decade. This special regime is specifically targeted at tourism projects and is granted and administered by the Honduran Institute of Tourism (IHT).
Duration:
Up to 15 years of tax benefits.
Beneficiaries:
Services and infrastructure associated with the tourism industry, such as Hotels, Condos, Time-Shares, Tourism Complexes, Convention Centers, Cruise Ports, Transport Terminals, Recreational Offers (aquariums, golf camps, theme parks, canopy tours, diving centers, rafting, trekking, extreme sports, etc.), special developments in protected areas, films, sports events, receptive tourism operators, transport services, leasing of vehicles, real estate projects with tourism focus, among others. To validate if the proposed project may obtain the benefits offered by this tax regime, specialized counsel is required. The list of beneficiaries is broad and more could be included.
Benefits: The Law for the Promotion of Tourism offers the following benefits:
- Exemption on Income Tax, Solidarity Tax, and Net Asset Tax. This special regime provides tourism projects with a 15-year exemption on the regular 25% Income Tax, the 5% Solidarity Tax, and the 1% Net Asset Tax.
- Exemption on Dividends Tax, Interests Tax, and Capital Gains Tax. The regime also offers a 15-year exemption on the 10% dividend tax (with regards to dividends received by the company from investments in other companies, not regarding the dividends it pays to its shareholders), the 10% interest tax, and the 10% capital gains tax.
- Exemption from Withholding Taxes. For a 5-year period, beneficiaries of this regime can make payments to non-domiciled service providers without applying the 25% withholding tax on their payments.
- Sales Tax Exemption. Tourism projects under this regime will enjoy a 10-year tax exemption on the 15% sales tax applied on the sale of goods and services. A benefitted company may import and make local purchases without having to pay the sales tax if such acquisitions are related to tourism investments.
- Import Tax Exemption. The special regime provides benefitted companies with a 10-year exemption on import taxes, tariffs, rates, surcharges, and duties, including the Selective Consumption Tax.
- Special Tourism Residency. Any person investing US$200,000.00 or more in a tourism project, or in shares of a company operating in the tourism industry, is eligible for a residency or a work visa in Honduras.
The regime’s beneficiaries are still subject to municipal taxes and fees, tax on dividends distributed to its shareholders (10%), as well as special taxes such as the land transfer tax (1.5%). Beneficiaries are still required to charge their customers the 15% and 18% sales tax, plus the 4% tourism services fee. Beneficiaries are still subject to supervision from the National Commission of Banks and Insurances (CNBS) under the Regulation of Non-Financial Designated Activities and Professions (APNFDs), which requires 24 economic sectors, including hotels, rentals, real estate, leasing, transport, among other tourism-related activities, to establish very strict Anti-Money Laundering and Financing of Terrorism (AMLFT) compliance programs.
Procedure:
The procedure involves the qualification of the tourism project by the Honduran Tourism Institute, which should be provided in no more than 15 business days. The tax exemptions are then requested to the Secretary of Finance and, once granted, the beneficiary must register before the Exonerations Registry, which is also administered by the Secretary of Finance. The project must then secure its municipal operating permit, construction permits, and environmental licenses.
Among the required documents for the qualification of projects is a feasibility study, project valuation, property surveys, designs, evidence of financial capacity, environmental license (issued or in process of being issued), quality seal (ISO or others), and registration before the National Chamber of Tourism. The beneficiary has 12 months to initiate its investment and must comply with charging its customers the 15% sales tax plus the 4% Tourism Services Fee.