Taxes and Tax Schemes in Honduras | What You Need to Know in 2025

Honduras, a Central American nation known for its rich natural resources and growing manufacturing sector, operates a comprehensive tax system that affects both residents and non-residents. Located strategically between the Caribbean Sea and Pacific Ocean, Honduras combines competitive labor costs with improving infrastructure, making it increasingly relevant for international businesses and investors.

The country's economy, driven by sectors like manufacturing, agriculture, and tourism, has shown steady development despite regional challenges. Honduras's tax system balances revenue generation with attracting foreign investment. Recent reforms have focused on modernizing tax administration and strengthening collection mechanisms.

The expat community in Honduras, while smaller than some neighboring countries, includes professionals in manufacturing, NGOs, and development sectors. The tax system, while comprehensive, offers various benefits and exemptions that can significantly impact an expat's financial planning.

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Honduran Income Tax

Honduras employs a progressive income tax system with rates ranging from 0% to 25%. Tax residents face the following income tax brackets (as of 2025):

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Social security contributions are mandatory, with employees contributing approximately 5% and employers 8.7% of salary.

If you want to have a better understanding of the taxes you should pay on personal income in Honduras, you can use the personal tax calculator in the Taxation section of the Honduras page.

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Honduran Tax on Overseas Income

Honduras's treatment of foreign income follows a territorial principle:

• Tax Residents: Taxed only on Honduran-source income
• Non-residents: Taxed only on Honduran-source income
• Foreign Income: Generally not taxable in Honduras

This territorial system makes Honduras particularly attractive for those with international income streams.

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Honduran Tax on Investments

Investment income in Honduras receives specific treatment under tax law:

• Capital Gains: 10% flat rate
• Dividends: 10% withholding tax
• Interest Income: 10% withholding tax
• Rental Income: Taxed as regular income with deductible expenses

The system includes special provisions for investments in priority sectors and free trade zones.

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Honduran Corporate Taxation

Corporate taxation in Honduras is structured as follows:

• Corporate Income Tax: 25% on net income
• Alternative Minimum Tax: 1.5% on gross income
• Sales Tax (ISV): 15% standard rate
• Municipal Taxes: Vary by location

Special regimes exist for companies operating in free trade zones and special economic development zones.

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Special Tax Regimes

Honduras offers several special tax arrangements beneficial to international business:

Free Trade Zones (ZOLI): Complete income tax exemptions for qualifying companies.

Tourism Incentives: Tax benefits for tourism-related investments.

Manufacturing Benefits: Special regimes for manufacturing and assembly operations.

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Regional Comparison

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Tax Planning for Honduras

Effective tax planning in Honduras requires attention to several key areas:

Location Selection: Evaluating free trade zones versus regular regime operations.

Business Structure: Choosing appropriate corporate structures and understanding available incentives.

Employment Considerations: Managing social security obligations and benefits effectively.