In 2021, the Organization for Economic Cooperation and Development (OECD) issued a tax haven alert through a letter to the Honduran Ministry of Foreign Affairs, warning that “Honduras is a formally declared tax haven.”
1. Background
After implementing the new Tax Code in 2017, the principle of worldwide income, which consisted of the payment of taxes on income received abroad to Hondurans and residents in Honduras, was repealed, and the principle of territorial income was introduced.
Likewise, a series of legislative and administrative reforms were applied, such as Decree 117-2021, which abolished the obligation for companies exempted from the payment of several taxes, to file Transfer Pricing statements or bank secrecy.
2. Position of the Tax Administration Service (SAR)
For the SAR, the post-coup regime created mechanisms to evade taxes for the benefit of large enterprises with capital abroad, thus turning Honduras into a tax haven.
3. OECD Position
The OECD warned that the “Free Zones” and “Special Economic Development Zones” regimes are pernicious and, therefore, the laws in their favor should be repealed.
Among the negative consequences of being a “tax haven,” the loss of financing and guarantees, nesting of illicit capital (drug trafficking or organized crime), and defensive measures taken by other countries damaging the economy of Honduras stand out.
Source: La Tribuna 16/02/2023
