Taxes in Honduras

The Honduran income tax system is governed by the principle of territoriality, meaning it primarily taxes income derived from sources within Honduras, while generally exempting income from foreign sources.

For businesses, the standard rate is 25% of the profit. Large entities may be subject to a 1% minimum tax on gross income if the standard corporate tax liability is lower. 

Honduras employs a territorial tax system, meaning residents and non-residents are generally taxed only on Honduran-sourced income. Personal Income Tax (ISR) is levied annually on income derived from capital, labor, or both, including salaries, wages, and professional fees. Honduras employs a territorial tax system, meaning residents and non-residents are generally taxed only on Honduran-sourced income. Personal Income Tax (ISR) is levied annually on income derived from capital, labor, or both, including salaries, wages, and professional fees.

The Sales Tax (Impuesto Sobre Ventas - ISV) in Honduras is essentially a form of Value Added Tax (VAT). It is levied non-cumulatively on the sale and importation of most goods and services within the country.

The standard rate is 15% on the sale and importation of most goods and services. However, 18% applies to certain luxury goods, including alcoholic beverages, cigarettes, tobacco products, and first-class or business-class air travel tickets.

Additionally, there's a 4% Tourism Services Tax (4%). Applicable to, services directly provided by businesses in the tourism sector, such as hotels, rental cars, and travel agencies.

The Capital Gains Tax (CGT) in Honduras is a separate, definitive tax applied to gains resulting from the non-habitual sale or transfer of assets, such as real estate, shares, and other rights. A flat 10% is applied to the net gain.

Both resident individuals (natural persons) and legal entities (corporations) on Honduran-sourced capital gains. Capital gains are generally viewed as income outside the taxpayer's ordinary line of business.

The taxation of real property in Honduras is structured at the municipal and national levels, involving both an annual ownership tax and significant taxes on transfers of property ownership. Levied and administered by the local Municipalities (Alcaldías). Calculated annually on the registered cadastral value (assessed value) of the property. Rates are generally very low and set by each municipality's local ordinances (Plan de Arbitrios). Rates typically range from 0.1% to 0.6% (or Lps 1.00 to Lps 6.00 per Lps 1,000) of the property's cadastral value, depending on classification (urban vs. rural).