Global

Details

  • Service: Tax, Global Mobility Services
  • Type: Business and industry issue, Regulatory update
  • Date: 1/1/2014

Honduras 

Our Income Tax Law estates: “any kind of yield, gain, profit, rent, interest, proceeds, profit, participation, salary, wage, fee and generally any perception in cash, securities, credit or kind, that modify the equity of the taxpayer is considered income.”

The resident individuals must pay income tax according to the following: The first one hundred and ten thousand Lempiras (L110, 000.00) of income will be exempt and from the gross income 40,000.00 Lempiras for medical expenses and others may be deducted; from the excess, the following rates will be applied according the table indicated in next page (Tax Rates), also are considered as deductible expenses for personal income tax purposes the contributions to pension funds and contributions to Régimen de Aportaciones Privadas “RAP”.

Individuals not resident or not domiciled in Honduras are subject to the 10% tax on income derived from sources within the country, whether derived from assets held in Honduras, for services rendered in the territory or outside it, or business conducted by a person domiciled or resident in the Republic, even if the revenue from such income is paid or credited to the subject in question, by resident or domiciled individuals in the country, or abroad.

Individuals who are temporarily in the Republic and carry out acts of any kind or provide services that produce taxable income may submit their income tax return before leaving the country and apply for the liquidation thereof.

Key message

The income tax levies the worldwide income of the taxpayer.


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Income tax

Describe rules that determine liability for income tax, such as residency status, source income, trigger points, types of income, tax rates.

Liability for income tax

Individuals that had remained for more than three (3) months in the country are considered residents therefore are obliged to pay income tax. Individuals receiving income from a single source are not obliged to file a tax return to the tax authorities.

Tax trigger points

Every individual resident or not resident in the country, receiving any form of income from Honduran source.

Types of taxable income

Any kind of yield, gain, profit, rent, interest, proceeds, profit, participation, salary, wage, fee and generally any perception in cash, securities, credit or kind that modifies the equity of the taxpayer is considered income.

Tax rates

Natural persons domiciled in Honduras will pay income tax according with the following scale of progressive rates:


Lps 0.01 to Lps. 110,000.00 Exempt
Lps. 110,000.01 to Lps.200,000.00 15%
Lps. 200,000.01 to Lps. 500,000.00 20%
Lps. 500,000.01 onwards 25%

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Liability for social security

The basis of the calculation for social security payment for each employee recorded in a payroll is 7,000 Lempiras.

  • The social security payment rate for the employer is 7.2%
  • The social security payment rate for the employee is 3.5%

There are no reciprocal agreements.


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Compliance obligations

Employee compliance obligations

Every taxpayer is required to submit to the Tax Authorities by himself or through an agent or legal representative, from January 1 to April 30 or next business day of each year, a tax return of the income obtained from one or more sources in the previous year. The individuals receiving income that does not exceed 110, 0000.00 Lempiras are exempt of submitting this tax return.

The employer is obliged to withhold the income tax and submit the corresponding tax return when the employee receives income from a single source.

If the employee is not a resident or not domiciled in the country the income received from Honduran source will be subject of 10% tax. The person performing the payments is obliged to withhold, file and pay the amounts to the tax authorities no later than the ten (10) subsequent days of the following month.

Employer reporting and withholding requirements

The employer is obliged to withhold the income tax to the employee only for the paid amounts; the amounts withheld must be filed and paid to the corresponding authorities.

The employer is obliged to perform a monthly withhold of 3.5 % for the social security payment to the employee recorded in a payroll the amounts withheld must be file and paid to the corresponding entity.

The employer is also obliged to withhold to the employee the 1.5% monthly contribution to the Private Contributions Regime (RAP).

These contributions are considered deductible for personal income tax purposes since September 2013.


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Other issues

Double taxation treaties

In Honduras there are no double taxation treaties in force.

Permanent establishment implications

Specific Permanent establishment regulations will become in forced until January 1st 2014.

Indirect taxes

VAT 12%

Transfer pricing

Transfer pricing regulations will become in forced until January 1st 2014.

Work permit/visa requirements

In order to work in Honduras the non residents must have a work permit.

Local data privacy requirement

N/A

Exchange control

N/A

Non deductible costs for assignees

N/A

Other

N/A

 

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Contact

Ruben Alonzo

Socio, Auditoria

KPMG in Honduras

+50 422 38 5605

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