Honduras - Taxation

Personal income in Honduras is taxed according to a progress schedule with rates running from 10% to 25%. The top bracket went from 40% in 1997 to 30% in 1998 to 25% since 2000. In 2001, the personal exemption level equaled six times the average income in Honduras whereas the threshold for the 25% bracket was 36 times the average income (down from over 100 times the average in 1997). Social security taxes are also collected. No distinction is made for tax purposes between individuals and businesses. Agricultural activities and industries classified as "basic" receive favorable depreciation rates. The corporate tax rate is 15% on the first L 100,000 of taxable income and 35% on the excess. The main indirect tax is a value-added tax (VAT) introduced in January 1976 with a standard rate of 3%. In 2002, the standard rate was 12%, with an increased rate of 15% applied to some items. Excise taxes are imposed mainly on beer and cigarettes, but also on imported matches, soft drinks, imported sugar, and new motor vehicles. New industries are exempted from income and production taxes and import duties for up to 10 years.

District and municipal governments obtain their revenues from taxes on amusements and livestock consumption, and from permits, licenses, registrations, certifications, storage charges, transfers of real estate, and fines.

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