In Honduras, a law reform was approved that simplifies the procedures that local and foreign companies must follow to take advantage of the Free Zone Law and extends for 15 more years the benefits that it grants to the companies of the regime.
From the National Congress of Honduras' statement:
The law was more than 44 years old and needed to be updated to make Honduras competitive
In Honduras, Congress approved the creation of the Social Interest Housing Bond, which will be a state contribution in cash or in kind, and may not be less than 11% of the value of the home to be purchased or rented.
According to Article 18 of the law, to access these bonds, the Secretariat of Housing and Human Settlements (SEVIAH) will prioritize access to the bond and housing care for households with incomes less than or equal to four (4) Minimum Wages, at its highest scale in force, Congress reported.
As of January 2020, electric vehicles imported into El Salvador and Honduras will be exempt from the import duty, which was 30% in El Salvador until now.
The measure, which will be applied in both countries, was approved at the session of the Council of Ministers of Economic Integration (COMIECO), held in El Salvador on December 5 and 6.
In Honduras, Congress extended for two more years the validity of the Law to Support Micro and Small Enterprises, which grants benefits such as exemption from payment of income tax and other taxes.
To opt for the benefits granted by the law, interested parties must process their permits, national and municipal licenses for its operation, reports a statement issued by Congress.
The exemption of the payment of several taxes for a term of up to 15 years is one of the benefits granted by the new tourism law approved by the Honduran Congress.
Among theincentivesincluded in the bill recently approved by the Congress of Honduras is a decrease in the payment of income tax, elimination of import taxes and"... taxes on the sale of land for hotel construction."
Between August and September a new law could be approved that would grant exemptions and other incentives to investments in hotel infrastructure and other tourist activities.
The tourism incentives bill was presented by President Hernández to the National Congress, which expects to complete the approval process no later than September.If approved, the new law would grant various tax benefits and incentives to investors developing tourism projects.
A bill being prepared by the government proposes granting tax exemptions and other incentives on investments made in hotel infrastructure and other activities in the tourism sector.
Among the incentives included in the bill are a decrease in the payment of income tax, elimination of import taxes and"... charges on the sale of land for hotel construction."
According to the ICEFI, "tax incentive policies seem to be a lost opportunity because of permanent tax expenses and the lack of tangible social benefits."
From a statement issued by the ICEFI:
Within the framework of the international meeting on Tax Justice and Transnational Fraud, held in Costa Rica, a study was presented on October 20 entitled 'The effectiveness of tax incentives for investment in Central America' in which an analysis was undertaken of the Central American experience in investment attraction through tax incentives.
Raw materials, veterinary pharmaceuticals, pesticides, seeds and live animals are exempt from the 15% sales tax.
The current document sets out eight categories of items from raw materials,supplies, equipment and machinery used to produce them. The different classifications contain 323 tariff items for tax free products.
The ICEFI highlighted the achievement in reducing the fiscal deficit, but noted "weaknesses in access to information and opacity in the management of public resources."
From a statement issued by the ICEFI:
The Icefi is concerned about the tax changes in recent years because part of its impact is an increase in the regressivity of the tax system, less fiscal space for social spending, as well as a latent opacity in the discussion on the use of State property and new fiscal institutions.These negative effects detract from the achievements made in terms of macro-fiscal stability in the medium term, we warn, this will increase democratic ungovernability, public distrust and restrict the scope for sustainable, sustained and inclusive economic growth.
A bill proposes renewing renewable energy generation contracts automatically rather than calling new tenders.
The proposal to reform the General Electricity Industry Act, in force since 2014, claims that"... renewable energy contracts remain in force, but do not benefit from the incentive payment of 10% of the base price and annual adjustment for inflation", as established by current legislation."
The payment of $0.03 per kW/h promised to solar generators a year ago has still not materialized, despite the fact that 12 plants are already operating in the country and others are in the processes of obtaining permits to start construction.
The fact that the incentives to increase the installation of power plants based on solar energy has not been made concrete affects not only the companies that own the plants, but also the banks who have been funding such projects since last year, because in many cases, "... the incentive scheme was part of the income submitted when applying for funding."
From 2014 to 2015 the size of central governments remained constant at an average 18.5% of gross domestic product (GDP).
From the introduction of the report: "Macrofiscal Profiles: 6th Edition" by the Central American Institute for Fiscal Studies (Icefi):
2015 proved to be a period of low tax advance for the Central American region. On average, the size of central governments remained constant compared to 2014, at 18.5% of gross domestic product (GDP). However, not all nations maintained this trend in the same way. While the governments of Nicaragua, Costa Rica and El Salvador, some of the largest fiscally in the region, continued to increase their participation in the economy, reporting increases of 1.5, 0.7 and 0.7% of GDP, respectively, the Government of Guatemala - one of the smallest in the world became even smaller, being reduced by 1.2% of GDP. For its part, the Government of Honduras reported a small decrease of 0.2% of GDP, fully converged with its policy of fiscal austerity, while that of Panama had a transient contraction of 1.4%, reflecting a reorganization established by the new administration and that, according to the plans for 2016, will be reversed in full.
The 50 companies already operating at Tocumen's airport facilities will be able to access free trade zone incentives if the request made by the administration of the terminal is approved.
The documentation was submitted to the National Commission of Free Zones at the Ministry of Trade and Industry (MITI), and there will be a 30 day period to review and approve the application.
The Honduran investment promotion office has sent a letter of invitation to entrepreneurs who lost their tax exemptions in Guatemala.
Honduras is looking to attract investment from Guatemala citing two advantages over its competitors: tax incentives on exports and port infrastructure in the Caribbean.
The person responsible for promoting foreign investment in Honduras, Vilma Sierra, sent a letter of invitation to the businessmen who lost their tax exemptions in Guatemala. The letter sent alarm bells ringing for Guatemalan union leaders because of the resemblance they have with the Honduran market, and the tax incentives they have lost and poor port infrastructure available.