The Free Zones regime is the largest single industrial policy instrument in Honduras, and the one most often discussed without figures. What follows is the statistical picture as it stands in mid-2026: how many firms operate under the regime, how many people they employ, what they ship, what the capital base looks like, what the regime costs the Treasury, and how reliably the administration actually delivers the benefit.

The industrial base

The Central Bank of Honduras conducts an annual survey of firms operating under the Free Zones regime. For 2024 it recorded 300 operating companies in textiles, harnesses and related services, concentrated in the northern zone because of proximity to Puerto Cortés, the country’s principal shipping port. The equivalent figure for 2023 was 318 firms. The Honduran Manufacturers Association reports that the count rose to 330 firms in 2025, an increase of thirty.

The regime’s reach extends beyond the firms inside it. In 2024 the industry sustained the output of a further 191 supplier companies, led by packaging manufacturers at 30.3 percent, other manufacturing at 26.1 percent, chemicals for dyeing and screen printing at 12.6 percent, and transport and communications at 5.3 percent.

Counted as physical estates rather than as firms, the number is larger. EY’s 2026 regional study places Honduras second in Latin America with 151 free zone complexes, behind the Dominican Republic and ahead of Colombia, Costa Rica and Nicaragua.

Employment

The Central Bank recorded 129,239 people working in the industry in 2024, equal to 25.7 percent of all manufacturing wage earners and 3.5 percent of the national labour force, of whom 76,200 were men and 53,039 women. Employment recovered in 2025 to 140,000, an increase of 10,761 positions on the 2024 base.

That recovery follows a sharp contraction. Between 2022 and 2024 the industry shed 33,411 jobs. Industry figures put peak employment at roughly 185,000 in 2022 and treat its recovery as an explicit target. EY, applying a broader definition of formal free zone employment, counts more than 162,000 positions in Honduras, behind Costa Rica and ahead of Nicaragua.

One segment moved against the trend throughout. Employment in automotive harness and parts manufacturing rose from 19,670 to 23,080 between 2022 and 2024, a gain of 3,368 positions, lifting the segment’s share of industry personnel from 12.1 percent to 17.8 percent.

The series in summary:

• 2023: 318 firms, 139,163 employed, exports of approximately USD 5,398 million
• 2024: 300 firms, 129,239 employed, exports of USD 5,408.8 million
• 2025: 330 firms, 140,000 employed, exports of approximately USD 5,500 million

Firm and employment figures for 2023 and 2024 are Central Bank survey results. The 2025 figures are Association estimates constructed on the Central Bank’s 2024 base and are therefore continuous with it. The 2023 export figure is derived from the reported 0.2 percent growth into 2024 and should be treated as approximate.

Exports

Free zone exports reached USD 5,408.8 million in 2024, a recovery of 0.2 percent after a 12.0 percent contraction the previous year. Harness shipments rose 4.5 percent on the strength of United States and Mexican automotive demand, while apparel fell 1.5 percent. Trade in goods and raw materials concentrated 90.3 percent of the industry’s exports on the United States, El Salvador and Nicaragua. Exports totalled approximately USD 5,500 million in 2025.

Against 129,239 workers, the 2024 export figure implies roughly USD 41,800 of exports per employee. That is the number to watch, because it measures whether the regime is moving up the value chain or simply adding heads.

The composition is shifting. Through September 2025, free zone exports stood at USD 4,128.4 million, up USD 27.2 million or 0.7 percent year on year, driven principally by a USD 126.3 million increase in electrical parts and transport equipment, which totalled USD 1,213.1 million. Harnesses accounted for close to three in ten export dollars on that reading, on a rising trajectory, while textiles carried the decline.

At national level the regime is not a marginal contributor. Goods for transformation represented 43.9 percent of total Honduran merchandise exports in 2025, against 56.1 percent for general merchandise. The Central Bank attributes to textile and harness manufacturing a 26.0 percent contribution to the increase in total manufacturing and 3.9 percent of gross domestic product in value added terms. Industry sources put value added at around 7 percent of GDP, approximately half of gross national exports, and USD 1,500 million to USD 1,800 million in foreign exchange inflows, roughly 10 percent of the national total. The two value added figures rest on different perimeters and should not be reconciled casually.

Regional and global position

Honduras is the largest textile supplier to the Central American market with a 45.2 percent share, ahead of Nicaragua at 25.5 percent and Guatemala at 22.2 percent. Across the Americas it ranks third with 13.0 percent, behind the United States and Mexico. In electrical parts and transport equipment it supplies 61.3 percent of Central American exports, making it the region’s leading producer, and it ranks third in the Americas after Mexico and the United States.

Production is concentrated in synthetic sportswear, cotton t-shirts and cotton socks, manufacturing for Nike, Adidas, Puma, Champion, Dickies and JC Penney, with harness clients including Ford, General Motors, Hyundai, Kia, Honda, Nissan and Volkswagen. Honduras is the eighth largest apparel supplier to the United States market, first in t-shirts and polo shirts and third in socks.

Capital stock and investment flows

The Manufacturers Association puts cumulative investment in industrial parks at USD 3 billion and investment in machinery, equipment and working capital at a further USD 3.1 billion, sourced from the United States, Canada, Taiwan, Hong Kong, Germany, Denmark, France, Korea, Mexico, El Salvador, Guatemala and Costa Rica. Against 2024 exports of USD 5.4 billion, an installed capital base of roughly USD 6.1 billion implies a capital stock a little above one year of shipments, which is characteristic of light manufacturing rather than of capital-intensive industry.

Flow data is weaker than stock data. Honduras closed 2025 with approximately USD 881 million in foreign direct investment, below both 2024 and the USD 1,056.9 million recorded in 2023. Financial and insurance activities accounted for 69 percent of the 2025 flow, goods for transformation for 12.6 percent, and commerce, hotels and restaurants for 11 percent. Analysts note that reinvested earnings continue to carry the aggregate, with little evidence of significant plant expansion, new company installations or the incorporation of new technologies. In the third quarter of 2025, maquila flows fell by USD 84.8 million on the accumulation of receivables and reductions in equity participations.

The honest reading is that the sector’s capital base is substantial and its recent net inflows are not. Greenfield capital is the constraint, not installed capacity.

Projects

San Juan Innovation Park in Choloma opened with a first-phase investment of USD 240 million across 107,000 square metres, housing a cotton spinning and blending plant, a textile plant and 57 MW of electricity generation, with 2,500 jobs. At completion the park is projected to represent USD 600 million to USD 700 million and 15,000 direct jobs across 350,000 square metres of construction on 136 manzanas, integrated from yarn to garment with its own generation and a corporate university.

Green Valley Industrial Park on the north coast, at roughly 500 acres, hosts Anvil Knits Honduras, Ceiba Textiles, Roman Knit, Pride Chemicals, Premier Narrow Fabrics, Leomar and Simtex, alongside Lear Corporation and Aptiv, both manufacturing wire harnesses and automotive electronic components.

Altia Smart City anchors the business process outsourcing segment, where more than 350 young people entered call centre and BPO employment through its finishing school programme.

At the Association’s thirty-third general assembly in February 2026, its president described 2025 as a demanding year concluding a four-year period of economic, regulatory and commercial difficulty, and identified an integrated investment attraction project as the priority, aimed at positioning Honduras as a competitive manufacturing destination and drawing investment into productive branches beyond textiles.

The fiscal performance

The Free Zones regime is the largest single item of tax expenditure in Honduras, and the Ministry of Finance publishes the number. For 2024, total tax expenditure was L 77,483.6 million, equal to 8.4 percent of gross domestic product against tax revenue of 17.5 percent of GDP. Of that total, L 28,473.0 million was attributable to special regimes, and the Free Zones regime accounted for L 14,406.5 million, or 51 percent of all special-regime tax expenditure.

The composition matters. Of the Free Zone total, L 7,511.1 million was customs duties, L 5,259.6 million income tax and related taxes, L 1,213.4 million sales tax through exempt purchase orders, and L 422.5 million fuel tax. The regime accounts for 84.3 percent of all customs-related tax expenditure in Honduras, which is what one would expect of a regime whose defining feature is extraterritoriality for customs purposes. Geographically, the departments of Cortés and Francisco Morazán concentrate 48 percent and 31 percent of all exonerations respectively.

The Ministry’s own cost-benefit chapter, which is critical of the regime in its conclusions, produces the following figures on tax expenditure, employment recorded by the social security institute, and cost per job.

• Free Zones (ZOLI): L 14,406.5 million, 105,374 jobs, L 136,718 per job
• Temporary Import (RIT): L 1,991.0 million, 17,125 jobs, L 116,263 per job
• Agriculture and agroindustry: L 388.0 million, 14,582 jobs, L 26,608 per job
• ZOLITUR (Bay Islands): L 1,078.4 million, 2,363 jobs, L 456,369 per job
• Tourism Promotion Law: L 407.4 million, 1,974 jobs, L 206,383 per job
• Renewable energy: L 1,584.0 million, 1,244 jobs, L 1,273,312 per job
• Public-private partnerships: L 997.2 million, 723 jobs, L 1,379,253 per job
• Thermal energy: L 4,769.7 million, 957 jobs, L 4,984,013 per job
• All regimes: L 28,473.0 million, 170,126 jobs, L 469,065 per job

Source: Secretaría de Finanzas, Informe de Gasto Tributario 2024, Tables 19, 20 and 21.

A note on comparability. The Ministry of Finance reports Free Zone foreign sales of L 188,228 million for 2024, declared by 299 of the 401 firms recorded under the regime. The Central Bank reports maquila exports of USD 5,408.8 million for the same year. The two are not the same measure: the first captures company-declared foreign sales across all Free Zone participants including commercial re-exporters and service firms, while the second measures goods for processing on a balance-of-payments basis. Both are correct within their own frame. Any ratio combining them is not, and none of the figures above does so.

The administrative pathway

Incorporation into the Free Zones regime is the process by which a commercial company or individual merchant applies to enjoy the benefits the law confers.

Three participant categories exist: the Operator, authorised to operate and administer a Free Zone from within it; the Operator-User, authorised to administer a zone and additionally to conduct permitted activities; and the User, which conducts permitted activities within a zone administered by another.

Three business categories are recognised:

• A commercial enterprise principally engaged in re-export must direct not less than 50 percent of annual sales to export or re-export.
• An industrial enterprise principally engaged in export undertakes the mechanical, physical or chemical transformation of raw materials, semi-finished products or finished articles, and may sell all or part of its production into the national market as modified by Decree 124-2013.
• An enterprise of services and connected or complementary activities supplies the production processes of other firms established in the zone.

The scope of permitted operations is deliberately wide. Article 10 of Decree 356 authorises the introduction, withdrawal, storage, handling, packing, display, purchase, sale, exchange, manufacture, mixing, transformation, refining, distillation, assembly and cutting of all classes of merchandise, products, raw materials and containers, together with any similar activity, excepting only goods whose import, trade or manufacture is prohibited by law.

Authorisation is granted by the Ministry of Economic Development, which also sets the territorial extension and permitted activities of each zone. The exoneration itself is then processed through the Ministry of Finance.

Does the system work?

The public exoneration register answers the question directly. Between January 2015 and June 2026 it records 17,916 exoneration files across all regimes. Free Zones is the largest single user with 5,515 files from 1,198 distinct beneficiaries, roughly 31 percent of the national total. Filing volume has been stable and rising: 772 Free Zone files from 409 distinct firms in 2024, 807 files from 418 firms in 2025, and 520 files from 367 firms in the first half of 2026. Within the regime, the most frequent procedures are income tax with net asset tax and the solidarity contribution, at 2,569 files, sales tax at 1,792 files, and the road patrimony fuel levy at 209 files.

The 409 distinct Free Zone filers recorded in 2024 corroborate, from an entirely separate administrative dataset, the 401 firms the Ministry of Finance reports as generating Free Zone tax expenditure that year.

Where the register records an outcome, and outcomes are recorded systematically from 2025, 97.9 percent of all applications across all regimes were granted in whole or in part. For Free Zones the figure is 98.6 percent: of 734 files, 692 were granted, 32 were granted in part, and 10 were refused.

The practical inference is that the constraint in this regime is qualification, not administration. Firms that meet the statutory criteria and file correctly obtain their exonerations at a rate approaching certainty. Files fail on eligibility and completeness, not on discretion.

Two provisions that are routinely overlooked

The income tax exemption carries a subject-to-tax proviso. Article 4 of Decree 356 exempts the profits obtained by Free Zone enterprises from income tax, provided that those enterprises are not subject in other countries to taxes that render the exemption ineffective. This is a 1976 statute anticipating a problem that has since become general. Where a foreign parent’s home jurisdiction taxes the Honduran income regardless, through controlled foreign corporation rules, the United States global intangible low-taxed income regime, or a Pillar Two top-up, the Honduran exemption may transfer revenue to a foreign treasury rather than to the investor. Whether the proviso is applied administratively is a separate question from whether it is in force. Either way, the ownership chain above a Honduran Free Zone entity determines whether the exemption has economic value, and it should be modelled before the structure is fixed rather than after.

Wages are taxed normally. Article 4 also provides that salaries and similar personal income of persons working in a Free Zone pay income tax in accordance with the ordinary law. The regime exempts the enterprise, not the payroll. Withholding obligations apply in full.

The 2026 trade environment

The tariff position changed this month and remains unsettled.

From 24 February 2026, following a United States Supreme Court ruling that the President lacked authority to impose global reciprocal tariffs under emergency economic powers, the White House applied a new tariff under section 122 of the Trade Act of 1974 for an initial 150 days to 23 July 2026, from which Honduran textile products were excluded, although a 25 percent tariff on Honduran electrical harnesses remained in force.

On the President’s instruction, the United States Trade Representative opened 60 investigations on 12 March 2026 into the effective enforcement of forced labour import prohibitions, holding hearings in April and July and receiving more than 1,600 written comments, and determined 10 percent to be the appropriate section 301 rate for economies that impose and undertake to enforce such a prohibition. Honduras was reclassified into the reduced 10 percent band, replacing an initially proposed 12.5 percent, a change the government attributed to the executive decree published on 16 and 17 July 2026 imposing a general, unconditional and structural prohibition on the importation of goods produced with forced labour. The determination contemplates exclusions for certain categories including agricultural, textile and apparel goods under the CAFTA-DR mechanism. The measures took effect on Friday 24 July 2026, placing Honduras in the 10 percent band alongside the United Kingdom, Canada, Mexico, India, Bangladesh, Cambodia, El Salvador and Guatemala, with the European Union, Brazil, Switzerland, Japan and Korea in the 12.5 percent band.

Industry leadership has stated that Honduras currently carries a 10 percent tariff rising to 25 percent for harnesses and automotive parts, and is seeking parity with Mexico at zero, noting that the United States sources only around 10 percent of its textiles and made-up goods from CAFTA-DR countries and Mexico, with the remaining 90 percent coming principally from Vietnam, Pakistan and Bangladesh. Bilateral negotiations toward a trade agreement are under way directly with the Presidency.

The commercial logic is simple to state. Honduran competitiveness in this sector is a differential, not an absolute. What matters is not the Honduran rate but the gap between it and the Asian rate, and that gap is currently being set in Washington on a rolling basis.

Outlook

Respondents to the Central Bank’s survey identified rising tariffs, precautionary United States household consumption and geopolitical supply chain disruption as the principal factors shaping 2025 and 2026, and agreed that the effect would be felt materially from 2026 rather than in 2025. Projections for 2026 indicate a fall of 2 to 3 percent in production, 0.5 to 1 percent in exports, and mixed employment outcomes between 1 percent growth and 1 percent contraction.

Those projections predate both the July tariff determination and its CAFTA-DR exclusions, and should be read as a floor case rather than a forecast.

On the fiscal side, the Ministry of Finance projects total tax expenditure of L 83,682.3 million in 2025 and L 90,376.9 million in 2026, holding steady at 8.4 percent of GDP in each year. The principal recent legislative threat to the exemptions, the proposed Tax Justice Law, failed on the floor of the National Congress in May 2025 and has not been enacted.

What the figures mean for a prospective investor

Five observations follow from the data rather than from advocacy.

The regime is proven at scale but concentrated. Three hundred and thirty firms, 140,000 jobs and USD 5.5 billion of exports rest heavily on two products and one customer. Concentration is efficiency until it is exposure.

The growth is in harnesses and services, not apparel. Every recent series points the same way. An investment thesis built on textile expansion is fighting the numbers. One built on automotive components, electronics or business process outsourcing is running with them.

Installed capacity exceeds current utilisation. Employment sits materially below its 2022 peak. For an entrant, that means labour and, in places, space and utilities are available without waiting on greenfield construction.

The administration delivers. A 98.6 percent grant rate across 734 adjudicated Free Zone files is not a promotional claim, it is an administrative record. The work is in qualifying and filing correctly, not in obtaining discretion.

The binding variable is trade policy, not tax. The Free Zones exemptions are settled and long dated. The tariff differential is neither. Any model built on this regime should be stress-tested against tariff scenarios rather than against changes to the exemptions, and against the subject-to-tax proviso in the investor’s own home jurisdiction.

Sources

• Banco Central de Honduras, Industria de Bienes para Transformación y Actividades Conexas 2024 (Encuesta Anual 2024), and quarterly external trade reports.
• Secretaría de Finanzas, Dirección General de Política Tributaria, Informe de Gasto Tributario Honduras Año 2024, Tomo IV del Proyecto de Presupuesto General de Ingresos y Egresos de la República, Ejercicio Fiscal 2026 (Tegucigalpa, septiembre de 2025), Tablas 13, 19, 20 y 21 y § 7.3.
• Secretaría de Finanzas, Dirección General de Exoneraciones Fiscales y Franquicias Aduaneras, Registro de Solicitudes de Exoneración, enero 2015 a junio 2026 (17,916 expedientes). Cálculos propios de INERTIA Advisory LLC.
• Secretaría de Desarrollo Económico / ProHonduras, Incorporación al Régimen de Zonas Libres, citando el Decreto No. 356 del 21 de julio de 1976, Arts. 4 y 10.
• Asociación Hondureña de Maquiladores (AHM), datos de inversión, empleo y afiliación.
• EY, Zonas Francas: El ecosistema que redefine la inversión en la región (2026).
• Office of the United States Trade Representative, determinaciones bajo la Sección 301 (julio de 2026); Oficina Presidencial de Comercio Exterior de Honduras.
• Decreto No. 356, La Gaceta, 21 de julio de 1976, Ley de Zonas Libres y sus reformas. Decreto No. 8-2020, La Gaceta No. 35,175, 14 de febrero de 2020. Acuerdo Ejecutivo No. 41-2020, La Gaceta No. 35,248, 10 de mayo de 2020, Reglamento de la Ley de Zonas Libres. Decreto No. 124-2013, 25 de junio de 2013. Decreto No. 131-98, La Gaceta, 20 de mayo de 1998, Art. 17. Decreto No. 278-2013, La Gaceta, 30 de diciembre de 2013.

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INERTIA Advisory LLC advises on Free Zone qualification and structuring, including Operator, Operator-User and User authorisation, customs and origin analysis, cross-border tax modelling, and the corporate and accounting architecture the regime requires. This article is general information current to 26 July 2026 and is not legal, tax or investment advice.