Honduras taxes residents on worldwide income and non-residents on Honduras-source income only. Honduras has no Controlled Foreign Company regime. Honduras operates a self-assessment system, with the Servicio de Administracion de Rentas (SAR) conducting post-filing review.
The Honduran tax year is the calendar year. The corporate filing deadline is generally 30 April of the following year.
Honduras's headline corporate income tax (CIT) rate is 25% plus 5% surcharge over HNL 1 million.
The headline personal income tax (PIT) rate is 25%.
The standard VAT/GST (or equivalent consumption tax) rate is 15% (sales tax).
An individual is tax resident in Honduras if present in the country for more than 90 days in a fiscal year, whether continuously or not. Corporate residence is not defined by a separate central-management-and-control test in the same way as many other jurisdictions; Honduran resident companies are simply taxed on a territorial basis by default. Honduras runs a territorial system: resident companies and resident individuals are taxed only on Honduras-source income, and non-resident companies are taxed only on Honduras-source income as well. Gains from the sale of shares in a foreign affiliate by a Honduran corporation are generally treated as foreign-source and fall outside the Honduran tax base, and foreign branches of Honduran corporations operating outside Honduras are not subject to Honduran tax on their foreign-source income.
A non-Honduran entity has a Honduras permanent establishment through a fixed place of business or a dependent agent habitually concluding contracts in Honduras on the entity's behalf, following the OECD Model Treaty definition as applied under Honduran domestic law and any applicable tax treaty.
Honduras has no CFC regime and has not enacted legislation to tax the undistributed income of foreign subsidiaries - confirmed independently by two sources. The territorial system removes the need for a CFC-type inclusion mechanism, since foreign-source income is outside the tax base regardless of who controls the foreign entity earning it. Honduras has no general anti-avoidance rule (GAAR). It does have transfer pricing rules, though narrower in scope than most jurisdictions' - they apply specifically to transactions between Honduran resident entities and entities operating under a special tax regime, with the tax administration able to separately evaluate economic substance in cross-border related-party transactions.
Honduras has no thin capitalization rules. Interest payments are deductible where connected to taxable Honduras-source income, regardless of the residence of the lender, subject to transfer pricing and withholding requirements, rather than being subject to a debt-to-equity ratio cap.
Honduras does not use an elective check-the-box classification system; entity classification generally follows the entity's actual legal characteristics. Honduras does not have a comprehensive ATAD2-style anti-hybrid regime.
No foreign bank account or foreign financial asset reporting regime exists requiring residents to separately disclose foreign accounts; foreign income is reported through the standard annual tax return.
Honduras does not provide a broad participation exemption for foreign dividends; relief from double taxation is available primarily through Honduras's foreign tax credit system.
Honduras's territorial tax system limits the practical role of a foreign tax credit, since foreign-source income is generally outside the Honduran tax base to begin with for both residents and non-residents - consistent with the Residency section above, and confirmed across multiple independent current sources including a Chambers and Partners practice guide.
Honduras has not signed any comprehensive double tax treaties with any jurisdiction - there is no treaty definition of permanent establishment in Honduran practice because none currently exists. Honduras does maintain a Tax Information Exchange Agreement (TIEA) with the United States, and bilateral investment treaties or free trade agreements providing investor protection (international arbitration for expropriation/nationalization disputes, not double-tax relief) with Canada, the Dominican Republic, the Netherlands, Panama, Spain, Switzerland, the United Kingdom, and the United States.