DOING BUSINESS IN HONDURAS IN 2020
Since 2003, Healy Consultants Group PLC has assisted our Clients with business registration in Honduras. Our services include i) Honduras company incorporation ii) government license registration iii) business bank account opening iv) employee recruitment i) visa strategies and vi) office rental solutions.
Summary table of Honduras company registration
|Summary||Tax Resident LLC||Corporation||Free zone LLC||Tourism company||Branch office|
|Also known as||SdeRL||SA||ZOLI company||Tourism company||Branch|
|Best use of company?||All products and services||All products and services||Manufacturing and export trading||Tourism services||Specific projects|
|How soon can you invoice Clients\sign sales contracts?||4 weeks||4 weeks||4 weeks||4 weeks||2 weeks|
|How soon can you hire staff?||4 weeks||4 weeks||4 weeks||4 weeks||2 weeks|
|How soon can you sign a lease agreement?||1 week||1 week||1 week||1 week||1 week|
|How long to supply corporate bank account numbers?||6 weeks||6 weeks||6 weeks||6 weeks||6 weeks|
|How long to supply company registration \ tax numbers?||4 weeks||4 weeks||4 weeks||4 weeks||2 weeks|
|Corporate tax rate on annual net profits?||25%||25%||0%||0%||25%|
|Limited liability entity?||Yes||Yes||Yes||Yes||No|
|Government grants available?||Yes||Yes||Yes||Yes||Yes|
|Government approval required for foreign owners?||No||No||No||No||No|
|Resident director/partner/manager/ legal representative required?||No||No||No||No||Yes|
|Minimum paid up share capital?||US$200||US$1,025||US$2,500||US$200||None|
|Can bid for Government contracts?||Yes||Yes||Yes||Yes||Yes|
|Corporate bank account location?||Banco Atlántida||Banco de Occidente||Banco del País||Banco Hondureño del Café||Citibank de Honduras|
|Can secure trade finance?||Yes||Yes||Yes||Yes||Yes|
|VAT payable on sales to local customers?||15%||15%||15%||15%||15%|
|Average total business set up engagement costs?||US$17,400||US$19,400||US$21,400||US$21,400||US$20,550|
|Average total engagement period?||2 months||2 months||2 months||2 months||2 months|
Honduras company registration summary
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Advantages and disadvantages
Advantages of Honduras company registration
- A Honduras limited liability company (SdeRL) can be incorporated with 1 director and 2 shareholders, who can be of any nationality and can either be individuals or corporate bodies. The minimum share capital required is only US$250 and our Clients do not need to travel to complete the engagement;
- Foreign entrepreneurs will find business in Honduras smooth because they can i) incorporate and 100% own companies in any part of the country without restrictions ii) own property iii) export goods and services without restrictions;
- Honduras is a signatory to the US-Central America Free Trade Agreement (CAFTA) encouraging trade between the member countries and increasing good ties with the US, Honduras largest trading partner;
- Companies established in the Free Trade Zones in Honduras are exempt from all income taxes for a period of up to 20 years and 10 years for municipal taxes;
- With 50% of the population falling under the age of 19, Republic of Honduras promises a very youthful and robust work force;
- Honduras is a mineral-rich nation known for its vast mining sector. The nation has major reserves in lead, zinc, gold, copper etc among others. From January to July 2018, the economy exported i) zinc worth US$37.4 million; ii) lead worth US$11.7 million; and iii) gold worth US$59.7 million. Moreover, Honduras developed strong trade relations with reputable jurisdictions such as Belgium, South Korea and Australia.
Disadvantages of Honduras company registration
- Our Clients will find it difficult to incorporate a branch of a foreign company in Honduras because the commercial code requires at least 1 Honduras permanent resident to legally represent the company and a minimum share capital of US$1,300;
- A Honduras LLC is subject to i) a corporate tax rate of 25% ii) a 5% surtax on annual taxable income above US$46,000 iii) a sales tax of 18% on sale of goods and services in the country;
- Due to declines in economic freedoms including freedom from corruption and investment freedom, Honduras currently ranks as the 93rd freest economy out of 186 economies and 17th out of 29 jurisdictions in the South American and Caribbean region;
- Gang related violence, drug trafficking and political polarization are grave concerns limiting Honduras’ economic potential and political and social stability;
- Foreign investors will find it difficult to enforce contracts due to rampant corruption and the inefficiency in the judicial system. Enforcing a legal contract may take up to or more than 2 and a half years;
- English speaking entrepreneurs will find it difficult and expensive doing business in Honduras to the low proficiency in English. Additionally, Honduras Commercial Code requires that all business documents be translated into Spanish, the country’s official language;
- Honduras has a small population of approximately 9 million people with 50.27% of its economy engaged in the services sector. As a result, it might prove to be difficult for entrepreneurs to hire labour in other sectors such as agriculture or manufacturing.
Best uses for a Honduran company
- Entrepreneurs in the textile industry will find Honduras a great jurisdiction to do business in the Americas as it ranks as the 3rd largest exporter of textile products and apparel to the United States, only after China and Mexico.
- Time to incorporate: Three weeks
- Cost to set up: US$17,400
- Minimum capital: US$200
- Physical office required: No
- Shareholders: 2
- Directors: 1
- Company secretary: No
- Resident director: No
- Corporate tax rate: 25%
- Corporate tax base: Worldwide
- Shelf companies: No
- Main company type: S. de R.L.
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