Includes steps involved in establishing a local office.
Efforts are underway in Honduras to further streamline registration requirements to establish an office. On July 8, 2018, the Government of Honduras announced the creation of a high-level “Technical Cabinet” aimed at formulating, implementing, and monitoring a Strategy on Simplification of Administrative Procedures at state offices.
Another important step in this regard has been enactment of a law on simplification of administrative procedures in setting up a company (Article 308 of the Commercial Code, Decree No. 255-2002), as well as the establishment for a “Single Window for Investors” (Investment Protection & Promotion Law 2011). Although challenges still remain, significant improvements have been made in eliminating a series of long and costly administrative obstacles. According to the latest World Bank’s Doing Business Report, the time required to launch a business in Honduras was reduced from 62 days in 2005 to an average of 13 days in 2017. Out of 190 economies, Honduras ranked an overall 115th on the 2017 “Ease of Doing Business.” This report listed “Registering Property” as one of the most difficult indicators for doing business in Honduras with regards to procedures, time, and cost.
As part of an initiative supported by the United Nations Conference on Trade and Development (UNCTAD), Honduras has developed a web-based e-Government System to assist towards business facilitation through transparency, simplification and automation of rules and procedures relating to enterprise creation and operation. This electronic tool provides important information on relevant procedures to establish and operate a business in Honduras, including areas such as taxation, environmental licenses, special incentive regimes, operation permits, and property registration.
Foreign businesses setting up operations in Honduras are subject to the Commercial Code, which recognizes several types of mercantile organizations: individual ownership, general partnership, simple limited partnership, Limited Liability Company (LLC), corporation and Joint Stock Company. The most common and economically significant legal entities are corporations (Sociedad Anónima, or SA) and Limited Liability Companies (Sociedad de Responsabilidad Limitada, or SRL). Starting capital for a limited liability company should be no less than 5,000 Lempiras (L)/ US$210 and always include at least two partners. Required starting capital for a stock company or corporation is 25,000L/ US$1,042 and should always include at least five partners.
An Environmental Impact Assessment, obtained through the Honduran Ministry of Natural Resources & the Environment, is an important requirement for any project, industrial facility, or other public or private activity that could generate potential harm to the environment, natural resources, or national cultural and historical sites. Additional information for doing business in Honduras, as it pertains to the specific requirements for different sectors of investment, is available through the Honduran Ministry for Economic Development at http://www.prohonduras.hn.
The following information summarizes the eleven (11) steps involved in setting up a business in Honduras. Thanks to an innovative partnership with the Government of Honduras, some of these procedures can be handled by the Chambers of Commerce of Tegucigalpa and Cortés, slightly reducing the time and effort required to establish a business.
- Procure a certificate of deposit at a local bank; pay the registry fee. Time to complete: One day; cost to complete: Lps. 100.00 (US$4.17)
- Establish the company before a Notary Public, who will draw up the articles of incorporation. Time to complete: Two days; cost to complete: notary fees of five percent for starting capital up to Lps. 25,000 and three percent for companies with over Lps. 25,000 (US$ 1,042) of share capital
Comment: A company may be set up by public subscription or simultaneous foundation. The procedures described here are for simultaneous foundation (fundación simultánea). The constitution instrument should be written on stamped paper (papel sellado). The notary uses its paper for the protocol (the original signed document in the notary’s custody) and for the first copy (testimonio) of the instrument of organization.
- File the articles of incorporation with the Mercantile Registry at the Chamber of Commerce. Time to Complete: Two days. Cost to complete: US$8.00 for the first L1,000 of capital.
- Apply for a tax identification code (Registro Tributario Nacional, RTN) at the Revenues Administration Service (Servicio de Administración de Rentas-SAR). Time to complete: One day; Cost to complete: no charge.
Comment: All natural or juridical persons must obtain a RTN. In order to obtain the RTN, the Notary who authorizes the incorporation deed must send a note to the administrative authority informing them of the incorporation.
- Acquire legal accounting and “minutes” books. Time to complete: One day; Cost to complete: US$45 (about US$0.5 per page).
- Register with local and national Chambers of Commerce. Time to complete: One day; Cost to complete: US$77.00.
- Apply for an operational permit (Permiso de Operación) from municipal authorities. This step can now be conducted directly by the company, without the services of an attorney. Time to complete: One day; Approximate cost: L1,250.00 (US$52).
Comment: To obtain the operational permit, it is necessary to fulfill some or all of the following requirements, depending on the type of industrial or commercial activity:
a) Copies of the personal identification card and municipality tax solvency of the General Manager;
b) Copy of the RTN;
c) Copy of the company’s articles of incorporation (Escritura de constitución)
d) Copy of the cadastral code (Clave cadastral) corresponding to the place in which the corporation will operate its business;
e) Zoning record;
f) Environmental impact assessment;
g) Tenancy agreement and income tax solvency record of the owner of the place in which the corporation will operate;
h) Cadastral inspection in the place in which the corporation will operate its business;
i) Payment of the following taxes (which vary based on the company’s income): nomenclature taxes; zoning tax; inspection tax; code tax; environmental tax; annual fire department and garbage department taxes.
8. Register for sales tax and acquire authorization of the company books. Time to complete: Two days. Cost to complete: no charge.
Comment: According to the Tax Code (Código Tributario), corporations are required to file an incorporation instrument and operation permits with the Minister of Finance, in order to pay sales taxes imposed on the sale of goods or services.
9. *Register with the Social Security Institute (Instituto Hondureño de Seguridad Social, IHSS). Time to complete: Three days (simultaneous with previous procedure); Cost to complete: No charge.
Comment: IHSS is the national social security hospital and patient care institution for company workers and their dependents. Corporations are required to contribute five percent of each employee’s salary for illness and maternity (Enfermedad y Maternidad, EM), plus two percent for disability, old age and death (Invalidez, vejez y muerte, IVM).
10. *Register with the Professional Training Institute (Instituto Nacional de
Formación Profesional, INFOP). Time to complete: One day (simultaneous with previous procedure). Cost to complete: No charge.
Comment: Employers are required to contribute one percent of the company’s total payroll to INFOP.
11. *Register with the Social Housing Fund (Régimen de Aportación, (RAP) al Fondo
Social de la Vivienda (FOSOVI). Time to complete: 1 day (simultaneous with previous procedure). Cost to complete: No charge.
Comment: If a corporation has more than 10 employees, it is required to contribute 1.5 percent of each employee’s salary.
Note: Steps marked with an asterisk (*) may be completed simultaneously.
Additional Sources of Information:
World Bank/Doing Business
United Nations Conference on Trade and Development
Establishing a Business Portal
Online Business Registrations
FIDE-Investment & Exports
Secretaría de Desarrollo Económico (SDE)
American Chamber of Commerce
Chamber of Commerce and Industry of Tegucigalpa
Chamber of Commerce and Industry of Cortés