Volume 4, Number 28, Page 4

Honduras: Laws that Apply to Foreign Export Companies

by FIDE

Long known as a producer of bananas and coffee, Honduras’ exports of non-traditional goods —cultivated shrimp, tilapia (fish), paper made from bamboo, and organically grown fruits and vegetables, to name a handful — have contributed to the growth of the country’s economy as a whole and the rise in exports from $833 million in 1992 to $1.19 billion in 1995.

Part of the credit for the growth in exports goes to Honduras’ stepped-up efforts to become a more active participant in the global economy. Besides its longstanding trade agreements with neighboring Central and South American countries, Honduras has become a member of the Central American Common Market (CACM). Under the Generalized Systems of Preference, Honduras exports most goods duty-free to the United States.

In addition, the government has passed laws to foster the growth of the export industry. Foreign companies exporting from Honduras can take advantage of these special incentives, which are outlined below.

Free Zone Law

A special law has been established for export companies operating in government Free Zones and provides the following benefits:

• No import or export duties are imposed for materials, equipment, office supplies, and other items required by manufacturing plants.
• Companies are exempt from income, city and county taxes.
• 100% repatriation of currency is permitted.
• The following cities have been designated as Free Zones: Puerto Cortes, Omoa, Choloma, Tela, La Ceiba and Amapala.
• Export Processing Zone Law

As of 1987, Private Export Processing Zones can be established in any part of the country. Companies within a zone can enjoy the same benefits available under Free Trade Zones.

Investment Law

Approved in 1992, the investment law seeks to improve Honduras' ability to compete in world markets. The law provides a transparent legal framework for investment, treats national and foreign investments equally, reduces excess government controls and intervention, and guarantees a limitless percentage of foreign-owned capital.

Temporary Import Law

The Temporary Import Law applies to companies operating outside the designated Free Zones or Export Processing Zones and exporting 100% of total production to markets outside the Central American region. Qualifying companies can import, free of import duty, the equipment and materials required to manufacture their goods. Income tax exemption for up to 10 years can also be obtained. However, city taxes and a customs broker fee must be paid.

Special approval must be obtained to operate under the Temporary Import Law. One should allow four weeks to process the initial application documents.

Environment Law

The Environment Law was issued in 1993 to provide a framework that will allow the orientation of agricultural, cattle, forest and industrial activities toward practices compatible with the conservation and sound, sustainable use of natural resources and the protection of the environment as a whole.

Tourist Free Zone Law

The Tourist Free Zone Law designates areas as private free zones for tourism development and accords them the same fiscal benefits as the private Export Processing Zones. Additionally, the law permits the import of motor vehicles, boats, yachts and airplanes for use within the zone.

Intellectual Property Rights Law

Issued in 1993, the Intellectual Property Rights Law provides protection, in accordance with international conventions and standards, to national and foreign works published in Honduras or elsewhere.

Corporate Legal Framework

One hundred percent foreign ownership is acceptable under Honduran Law.

Corporations organized under Honduran law can take any of the following forms: Sociedad Anónima (corporation); Sociedad Anónima de Capital Variable (variable capital corporation); and Sociedad de Responsabilidad Limitada (limited partnership).

FIDE is the Foundation for Investment and Development of Exports. The foundation has offices in Tegucigalpa, Miami and Taiwan. Visit FIDE's Internet site at www.hondurasinfo.hn.