Honduras: Legal Action Over 1.5% Sales Tax

The private sector has filed a constitutional complaint against Article 22-A of the Tax Act on income tax arguing that it distorts fundamental tax principles.

Thursday, June 19, 2014

From a statement issued by the Honduran Council of Private Enterprise:

As entrepreneurs we have supported the planning processes of public finances to improve tax revenues and the controlling of public expenditure, which allow for the signing an agreement with the International Monetary Fund (IMF). Tax burdens should be clear and simple, non-discriminatory, fair and universal, as established by our constitutional system.

The private sector is against fees, taxes, levies, or any other tax or procedure that generates distortions of the law and the economy, or are of confiscatory measure. Approval of 1.5% of gross income assumes that all sales necessarily generate profits contravening and distorting the fundamental principles of ISR, which consist that taxes are paid when profits have been generated. This contradicts the distributive nature of ISR and affects the economic capacity of the taxpayer, thereby creating a confiscatory tax.

The Cohep does not accept that institutions or companies challenging the tax of 1.5% or any other law, or tax measure approved by the Government arbitrarily, should be described as evaders.

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The Constitutional Court has rejected the constitutional challenge presented by the business sector and left in place the collection of 1.5% income tax.

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