§ 01 · Special Investment Regimes
Investment Regimes in Honduras
Honduras offers three distinct statutory routes for structuring an inbound investment. They are not variants of a single incentive. They differ in what they exempt, in the authority that administers them, in the term of the benefit, and in the legal and political risk the investor is asked to carry. Choosing between them is a structuring decision taken at the outset, and it is expensive to revisit.
INERTIA Advisory LLC advises on that decision and executes it: regime selection, entity and holding structure, qualification and exoneration filings, and the compliance architecture required to keep a benefit once granted.
§ 02 · ZEDE
Zones for Employment and Economic Development
The regime
The Zones for Employment and Economic Development were created by constitutional amendment in 2013 and developed by the Organic Law of the ZEDE, Decree No. 120-2013. They are autonomous zones operating independently of national institutions, with their own legal, administrative and tax systems. A ZEDE is not a customs enclave with a fiscal holiday attached. It is a jurisdiction. It legislates, regulates, adjudicates and collects.
Próspera
Próspera ZEDE, on Roatán, is the most developed of the zones and the only one with a functioning financial services regulatory framework.
Income tax is imposed at 10 percent on a deemed base of 50 percent of gross income for natural persons and 10 percent of gross income for legal entities, giving effective rates of 5 percent and 1 percent. Retail value added tax is 2.5 percent effective and land value tax is 1 percent. The Charter permits no additional taxes without its own amendment, and from the later of 1 January 2030 or the date resident population passes fifty thousand, aggregate tax revenue is capped at 7.5 percent of gross domestic product.
Beyond rates, three features matter more to a structuring lawyer than the tax table:
Legal status: what an investor must be told
We state the position without softening, because counsel who softens it is not being useful.
The National Congress repealed the enabling legislation in April 2022. Because the ZEDE framework had been incorporated into the Constitution, the repeal required ratification by the following legislature, which did not occur. In September 2024 the Supreme Court, by a divided three-to-two vote, declared the framework unconstitutional with retroactive effect, a holding contested as incompatible with the doctrine of acquired rights. The zones have continued to operate as before, and Próspera maintains that its investments are protected under CAFTA-DR and its investment agreement with Honduras.
The related arbitration, Honduras Próspera Inc. and others v. Republic of Honduras, ICSID Case No. ARB/23/2, is pending, with a Decision on Preliminary Objections issued on 26 February 2025 and procedural orders on bifurcation and amicus participation in March and May 2026. Damages initially claimed reached USD 10.775 billion and were reported in 2025 to have been reduced to approximately USD 1.63 billion.
Honduras withdrew from ICSID in 2024. President Nasry Asfura signed the ICSID Convention in March 2026, and Honduras will rejoin on ratification. The current administration is acting to improve the business climate, attract investment and strengthen legal certainty for investors. No official timetable for the re-accession has been published.
The trajectory is favourable. It is not resolution. An investment into a ZEDE is a considered acceptance of constitutional risk in exchange for a jurisdictional advantage available nowhere else in the hemisphere, and it should be documented as such, with stability instruments, treaty protection and arbitration clauses drafted on the assumption that they will one day be read by a tribunal.
Entity formation and governance under Próspera law; regulatory election and licensing before the RFSA; legal stability and treaty protection analysis; arbitration clause architecture; residency and physical presence planning; and candid risk memoranda that survive review by an investor’s own counsel.
§ 03 · Decree No. 68-2017
Law for the Promotion of Tourism
The regime
Decree No. 68-2017 is a statute of public order and national interest whose object is to incentivise the Honduran tourism industry through second-generation investment incentives. It remains in force. Its implementing regulation is Executive Accord No. 618-A-2017, published in La Gaceta No. 34,486 of 8 November 2017.
Who qualifies
Natural or legal persons engaged in tourism services and activities previously qualified by the Honduran Tourism Institute may claim the benefits. Once qualification is granted, the Ministry of Finance must authorise the corresponding benefits by administrative resolution without imposing additional requirements beyond registration in the Register of Exonerated Persons.
Six categories qualify:
The benefit package
The benefits are non-extendable. The regime reaches investors who channel capital into tourism without operating in the sector, and it applies to tourism investment made after the entry into force of Decree No. 278-2013 on 21 December 2013, subject to evidencing the initial investment and renouncing any prior fiscal regime.
Feasibility and eligibility assessment against the six statutory categories; corporate and land-holding structure, including fideicomiso where title or financing requires it; qualification file before the Honduran Tourism Institute; exoneration filing and Register of Exonerados enrolment before the Ministry of Finance; and the accounting segregation required to defend the exemption on audit.
§ 04 · ZOLI
Free Zones Law
The regime
The Free Zones regime rests on Decree No. 356-1976, the constitutive law of the Puerto Cortés Free Zone, as reformed by Decree No. 08-2020, together with Executive Accord No. 41-2020 as its implementing regulation. It is administered principally by the Ministry of Economic Development, which authorises the territorial extension and the permitted activities of each Free Zone. Article 17 of Decree No. 131-98 renamed the 1976 statute and the regime was extended to the entire national territory.
Participants are classified as Operators, Operator-Users and Users. Free Zones are deemed situated outside the national customs territory and are subject to a special customs control regime.
The benefit package
Beneficiaries are relieved of income tax, the solidarity contribution, net asset tax, capital gains tax, sales tax on local purchases and imports, import duties, fuel taxes and municipal taxes. Full foreign ownership is permitted and capital and profits may be repatriated without restriction.
Two conditions are decisive at the structuring stage. A merchant or company that operates and pays tax in the national customs territory and directs the entirety of its production to the domestic market may not adopt the regime. Sales into the domestic market remain possible, but require customs nationalisation of the goods concerned.
Durability
When Decree No. 278-2013 repealed income tax exemptions granted under special laws generally, it expressly preserved those of companies operating under the Free Zones and Industrial Processing Zones regimes. Official analysis records the Free Zones regime as running to 2050 and the Law for the Promotion of Tourism as running to 2037. The principal recent legislative threat to both, the proposed Tax Justice Law, failed on the floor of the National Congress in May 2025 and has not been enacted.
Operator, Operator-User and User authorisation files before the Ministry of Economic Development; customs and origin analysis; the domestic-market sales question, which is where most Free Zone structures are compromised; and the accounting and inventory controls the regime presupposes.
§ 05 · Comparison
Comparative summary
| ZEDE · Próspera | Tourism Promotion Law | Free Zones · ZOLI | |
|---|---|---|---|
| Instrument | Constitution of Honduras (arts. 294, 303, 329); Decree 120-2013, Próspera Charter | Decree 68-2017 | Decree 356-1976, as reformed |
| Nature | Autonomous jurisdiction | National fiscal incentive | Customs and fiscal regime |
| Administrator | Technical Secretary, Próspera Council, and GSP | Honduran Tourism Institute and Ministry of Finance | Ministry of Economic Development |
| Direct tax | 1 percent effective on entities | Exempt, 15 years | Exempt |
| Indirect tax | 2.5 percent retail VAT | Exempt on qualifying purchases | Exempt |
| Customs | Outside the customs territory | Exempt, 10 years | Outside the customs territory |
| Governing law | U.S. common law and internal rules | Honduran law | Honduran law |
| Disputes | Próspera Arbitration Center | Honduran courts | Honduran courts |
| Sector | No restrictions, open economy | Tourism and enabling infrastructure | Export-oriented industry and services |
| Principal risk | Constitutional and political contestation | Qualification discretion and non-extendable term | Reform of the exemptions framework |
§ 06 · Selection
Choosing between them
Three questions usually settle it.
Where does the revenue come from? A business selling into the Honduran domestic market cannot sit inside the Free Zones regime and gains little from tourism qualification unless the activity is itself tourism. A business selling abroad, or selling services to non-residents, has the widest choice.
How much regulatory autonomy does the activity require? Regulated financial services, biotechnology, and any activity whose economics depend on a rulebook Honduras has not written point toward a ZEDE. Manufacturing and logistics rarely do.
What is the investor’s tolerance for constitutional risk, and over what horizon? A fifteen-year tourism exemption inside the ordinary Honduran regime and a one percent effective rate inside a contested jurisdiction are not the same instrument. They can also be combined: a mainland asset and a ZEDE holding or service entity is a common and defensible configuration.
We answer these in a written regime selection memorandum before any entity is formed.