Agreement 826-2018

PURPOSE.- To regulate the provisions contained in Decree No. 826-2018 containing the Law for Support to Micro and Small Business published in the Official Journal, La Gaceta, on the date of November 2018.

SCOPE OF APPLICATION.- The norms contained in the present Regulation are applicable within the National Territory for all Micro and Small Businesses that are beneficiaries in accordance with that established in the Law for Support to Micro and Small Business.

DEFINITIONS.- For purposes of the application of this Regulation, the following terms are defined: 1. MERCHANTS: Merchants are those defined in Article of the Commercial Code, natural persons who are owners of a mercantile business and societies constituted in mercantile form. 2. DIFOMIPYME: Direction of Promotion of Micro, Small and Medium Business of the State Secretariat in the Dispatch of Economic Development. 3. FORMALIZATION: Procedure by which Micro and Small Businesses are constituted, complying with the requirements established in the Law for Support to Micro and Small Business. 4. LAW: Law for Support to Micro and Small Business. 5. MICRO BUSINESS: It is any economic unit with a minimum of one remunerated person working in the field that may be its owner and a maximum of ten (10) remunerated employees. 6. SMALL BUSINESS: Those with a better combination of productive factors and commercial positioning that allow the business unit to accumulate certain profit margins. It has a more defined business organization and greater formalization in its management and registry, has a minimum of eleven (11) and a maximum of fifty (50) remunerated employees. 7. INDEPENDENT PROFESSIONALS: Natural persons who perform work or provide services in the free exercise of a profession when there is no relationship of economic dependence between the parties and they freely establish their remuneration. 8. SAR: Revenue Administration Service. 9. SEFIN: State Secretariat in the Dispatch of Finances. In case the legislation that governs the sector of Micro and Small Business undergoes reforms after the entry into force of the Law, the definitions expressed in numerals 5 and 6 of the present Article must be adjusted to such reforms. TITLE II FISCAL BENEFITS, FORMALIZATION PROCEDURE AND OBLIGATIONS CHAPTER I BENEFICIARIES

CATEGORIZATION OF BENEFICIARY.- Beneficiaries of the Law are natural persons and legal persons categorized as Micro and Small Businesses as follows: 1. Micro and Small Businesses that have been operating informally and formalize within a period of twelve (12) months counted from November 1, 2018, and complying with that established in the Law. 2. Merchants who constitute themselves formally and register in any Public Registry of Commerce and Chamber of Commerce of the Country, regardless of their capital stock, within a period of twelve (12) months counted from November 1, 2018. 3. Micro and Small Businesses constituted and in operation prior to the entry into force of the Law, provided that:

• a)

  They prove convincingly to the State Secretariat in the Dispatch of Economic Development between November 1, 2018 and December 31, 2018, that they have increased by generating new remunerated employment comparable to the payroll of remunerated employees in effect on September 30, 2018, derived from capital investment or reinvestment, expansion of operations or any increase in industrial, production, commercial or service activity;

• b)

  They accredit within a period of twelve (12) months counted from November 1, 2018, the authorization of the State Secretariat in the Dispatches of Labor and Social Security related to the preceding subparagraph; and c. They accredit within a period of twelve (12) months counted from November 1, 2018, that they do not have annual gross income exceeding Five Million Lempiras (L. 5,000,000.00) in the preceding fiscal exercise. 4. Independent professionals such as physicians, dentists, attorneys, certified public accountants...

FISCAL BENEFITS OF MICRO AND SMALL BUSINESSES.- The beneficiaries described in numerals 1, 2 and 3 of the Previous Article have the following fiscal benefits: 1. Exemption from payment of Income Tax established in Article of the Law on Income Tax and its Reforms. 2. Exemption from payment of Net Asset Tax established in Articles through of the Tax Equity Law contained in Decree No. published in the Official Journal, La Gaceta, dated April 2003. 3. Exemption from payment of the Solidarity Contribution established in Article of the Tax Equity Law contained in Decree No. published in the Official Journal, La Gaceta, dated April 2003, reformed through Article of Decree No. published in the Official Journal, La Gaceta, dated December 2009. 4. Exemption from payment of the Advance of one percent (1%) in concept of Income Tax established in Article of the Law for Strengthening of Income, Tax Equity and Rationalization of Public Spending contained in Decree No. published in the Official Journal, La Gaceta, dated April 2011. 5. Exemption from payment of twelve point five percent (12.5%) in concept of Income Tax established in Article of the Law on Income Tax reformed through Article of Decree No. published in the Official Journal, March 2009, dated June 2012. 6. Exemption from registral fees related to the incorporation act of the business. 7. Exemption from municipal fees that arise from the application of Articles and of the Law on Municipalities contained in Decree No. published in the Official Journal, La Gaceta, dated November 2004. 8. Exemption from the Municipal Personal Tax established in Articles Numeral and of the Law on Municipalities contained in Decree No. published in the Official Journal, La Gaceta, dated November 2004, when it comes to beneficiaries described in numeral 1 of the Previous Article. 9. Exemption from the Tax on Industry, Commerce and Services of the Municipalities established in Articles Numeral and of the Law on Municipalities contained in Decree No. published in the Official Journal, La Gaceta, dated November 2004, when it comes to beneficiaries described in numeral 1 of the Previous Article. 10. Exemption from fees for charges for the issuance of administrative acts, licenses or other concepts necessary for its operation that must be carried out in public institutions.

FISCAL BENEFITS OF INDEPENDENT PROFESSIONALS.- Independent professionals have only the fiscal benefit of being exempt from payments and from any fee in the process of obtaining sanitary licenses and operating permits in the Municipalities during the period of the validity of the Law.

APPLICATION OF FISCAL BENEFITS.- The fiscal benefits in matters of Income Tax established in the Law in accordance with the rules established in Article Numeral of the Tax Code are effective from the fiscal exercise.

TERMS OF FISCAL BENEFITS.- The enjoyment of the fiscal benefits described in Article shall be realized in accordance with the following rules: 1. FIVE (5) YEARS NON-EXTENDABLE: Fiscal benefits described in numerals 1 and 2 of Article of the present Regulation. 2. THREE (3) YEARS: Fiscal benefits described in numerals 3, 4 and 5 of Article of the present Regulation. This term may be extended for two (2) additional years at the duly motivated request of the State Secretariat in the Dispatch of Economic Development.

EXCEPTIONS IN THE ENJOYMENT OF FISCAL BENEFITS.- The following are not beneficiaries of the fiscal benefits described in Article of the present Regulation: 1. Independent professionals except as provided in the second part of Article of the Law. 2. Legal persons that develop tertiary economic activities regulated by the State of Honduras. 3. Legal persons that have as partners, shareholders or social participants natural persons that already form part of another mercantile society in an equal activity. 4. Legal persons that have as partners, shareholders or social participants natural persons that have formed part of another mercantile society in a similar activity. 5. Micro or Small Businesses that include within their social participation legal persons regardless of their category. 6. Legal persons that include within their social organization in character of partner, shareholder or social participant natural persons that have been partners, shareholders or social participants of a legal person that dedicates itself to a similar activity and is dissolved, liquidated or ceases its operations from the entry into force of the present Law. 7. Persons benefiting from special regimes in accordance with that established in Article of the Law on Efficiency in Income and Public Spending contained in Decree No. published in the Official Journal, La Gaceta, dated July 2009 and Article of the Law on Fiscal Responsibility contained in Decree No. published in the Official Journal, La Gaceta, dated May 2009.

FORMALIZATION MECHANISMS.- Formalization may be carried out through any of the following mechanisms: 1. Registration in accordance with that provided in Legislative Decree No. dated January 2008, containing the Law for the Protection, Benefits and Regularization of Informal Activity and its Regulation. 2. Registration through the portal "My Business Online" in accordance with that provided in Legislative Decree No. dated January 2014, containing the Law for the Generation of Employment, Promotion of Business Initiative, Formalization of Businesses and Protection of the Rights of Investors and its Regulation. 3. Any other mechanism contained in the Commercial Code, other applicable laws or the present Law.

COOPERATION.- The Revenue Administration Service (SAR) and other institutions involved in the application of the Law must provide cooperation to the State Secretariat in the Dispatch of Economic Development in the function of receiving and delivering documentation and information of the interested party to benefit from the benefits established by the Law.

MECHANISMS TO OBTAIN THE CERTIFICATE.- The legal representatives or authorized agents of the beneficiaries described in Article of the present Regulation may initiate the procedure for regularization and formalization through the following mechanisms: 1. Present the respective form in the Offices of SAR at the national level; or, 2. Fill out the virtual form through My Business Online.

PROCEDURE FOR OBTAINING CERTIFICATE THROUGH SAR.- The merchant must address himself to any SAR office at the national level with the intention of benefiting from the benefits of the Law. For such purpose, he must fill out the form for request for certificate of beneficiary of the Law to which he shall attach a copy of the Identity Cards of the partners, which must be collated with their originals by SAR personnel except in the case of numeral 4 of Article of the present Regulation. Once the request is presented with the required documentation, SAR shall remit electronically the request to the State Secretariat in the Dispatches of Economic Development for evaluation of the same, which must be resolved within a period not to exceed five (5) days counted from the submission of the request. Upon receipt of the proceedings, the Secretariat shall analyze the merits of the request and if approved shall remit electronically to SAR the Certificate that substitutes the operating permits issued by the Municipalities, which shall be delivered by the Revenue Administration Service (SAR) to the applicant following the security controls that are established for the same.

PROCEDURE FOR OBTAINING CERTIFICATE THROUGH MY BUSINESS ONLINE.- The merchant must access the Portal My Business Online, properly filling out the request for certificate of beneficiary of the Law to which he shall attach a copy of the Identity Cards of the partners except in the case of numeral 4 of Article of the present Regulation. The State Secretariat of Economic Development through DIFOMIPYME with the information provided in the request shall issue the Certificate within a maximum period of five (5) days counted from the date of submission of the request, which must be sent to My Business Online and the latter shall remit it to the electronic address included in the request. Prior to issuance of the Certificate through this mechanism, SAR must verify that it does not incur in that established in Article of the Law.

ISSUANCE OF THE CERTIFICATE.- The Certificate shall be issued only once and only to the applicants described in Article of the present Regulation. In case of theft, loss or destruction of a Certificate, the beneficiary may request in writing from the authority that issued it and accompany the complaint in case of theft or a sworn statement that expresses the causes that originated the loss or destruction of the Certificate, an authenticated copy of the original based on the request presented that is in his possession, indicating the notation "CERTIFIED COPY". This authenticated copy shall have the same date as the original Certificate.

CHARACTERISTICS OF THE CERTIFICATE. The Certificate issued by the Secretariat of Economic Development through DIFOMI, PYME must comply with the following characteristics:

• 1)

  Unique registration number

• 2)

  QR Code

• 3)

  Watermarks as security guarantees

• 4)

  Denomination of the Micro or Small Enterprise

• 5)

  Heading or economic activity that they will exercise

• 6)

  Address

• 7)

  Names of the Partners, shareholders or social participants when applicable, and

• 8)

  Estimation or number of salaried employees

• 9)

  Validity for a maximum period of twelve (12) months

USES OF THE CERTIFICATE. This Special Certificate is the sole accrediting document to enjoy the benefits established in the Law. The certificate for purposes of enjoying the fiscal benefits shall have a duration of admissibility according to the period established in the Law, unless they fail to comply with their obligations. Likewise, said Certificate must be presented in the annual registration in the Registry of Exempt Persons in the Secretariat of State in the Ministry of Finance. The certificate substitutes the operating permits extended by the municipalities and for these purposes shall have a duration of twelve (12) months. Said Beneficiaries must process their national and municipal permits and licenses corresponding to their operation with the understanding that if they do not do so they will not enjoy the benefits granted by the Law. The damages or injuries that could occur from any cause whatsoever during the period of time of twelve (12) months due to the operation of a Micro and Small enterprise shall be the responsibility of the beneficiary of this Law. The applicant and the persons who appear as partners in the certificate shall be liable civilly, penally, and administratively for the misuse that they give to the same.

REGISTRY OF CERTIFICATES. The Secretariat of State in the Ministry of Economic Development through DIFOMI, PYME as the issuing entity must maintain a permanent registry of all Certificates of Beneficiaries of the Law issued, which must contain at least the number of the Certificate unique with the folio and volume of registry record, the name of the beneficiary company, address and the date of its issuance.

DELEGATION OF THE ISSUANCE OF THE CERTIFICATE IN OTHER ENTITIES. The Beneficiary Certificate shall be signed and issued by the authorities of the Secretariat of Economic Development through DIFOMI, PYME who may delegate the signature and issuance of the beneficiary certificate to other Government offices.

ENTITY IN CHARGE OF THE ISSUANCE OF THE CERTIFICATE. The Secretariat of State in the Ministry of Economic Development is the entity in charge of the authorization of the Certificate for which purpose My Enterprise Online must generate said Certificate. The Tax Administration Service and any entity of the Public Administration must provide the cooperation required by said Secretariat.

INVALIDITY OF THE CERTIFICATE. The Special Certificate shall become null and void:

• 1)

  When it is proven that the partners of the Micro and Small Enterprises have as partners other distinct persons or those not listed in the special certificate

• 2)

  When the national and municipal permits and licenses corresponding to their operation are not processed within the period of twelve (12) months counted from the date of issuance and signature of the certificate. To this effect, once the aforementioned period has elapsed, the Secretariat of State in the Ministry of Economic Development must request the presentation of the national and municipal permits and licenses corresponding to their operation in order that they may continue enjoying their benefits.

OBLIGATIONS OF THE BENEFICIARIES. The beneficiaries of the Law have the following obligations:

• 1)

  Register annually in the Registry of Exempt Persons administered by the Secretariat of State in the Ministry of Finance through the General Directorate of Control of Franchises and Customs. The registration procedure may be carried out directly by the beneficiary or through a legal representative and without any payment in accordance with what is provided in numeral 1 of Article of this Regulation.

• 2)

  Once the beneficiary obtains the certificate, they must comply with the obligations established in Articles and of the Law and the other obligations contained in this Regulation.

• 3)

  During the validity of the certificate the beneficiary must process their national and municipal permits and licenses corresponding to their operation, in case of non-compliance the certificate loses its effects.

• 4)

  Within the Constitution of the company must declare the will to be subject to the Regime of the Law and this Regulation.

• 5)

  Present the Sworn Declaration of Fiscal Sacrifice in accordance with Article of the Law, no later than May 31 of each year.

• 6)

  Present the declarations, withhold taxes in its case, declare its address and other information contained in the Tax Code contained in Decree No. and its reforms and Erratum in accordance with what is provided in Article Numeral of the aforementioned legal body.

• 7)

  Comply with the formal obligations contained in Articles and of the Tax Code contained in Decree No. and its reforms and Erratum.

• 8)

  Comply with the obligations established in the second paragraph of Article of the Law, relating to:

  • a)

    Tax on Capital Gains established in Article of the Income Tax Law and its reforms, attending to the rules established in Article of the Law on Efficiency in Income and Public Expenditure and its reform established in Article of the Law on Ordering of Public Finances, Control of Exemptions and Anti-Evasion Measures contained in Decree No. and its reforms and interpretations

  • b)

    Tax on Dividends or any other form of participation in utilities established in Article of the Income Tax Law and its reforms contained in Decrees No. published in the Official Gazette La Gaceta dated April, No. published in the Official Gazette La Gaceta dated December, and Decree No. published in the Official Gazette La Gaceta dated April

  • c)

    Single Tax of ten percent (10%) on income in concept of interest established in Articles, and of the Law on Simplification of Tax Administration contained in Decree No. published in the Official Gazette La Gaceta dated August, reformed through the Law on Restructuring of Income Mechanisms and Reduction of Public Sector Spending, Promotion of Production and Social Compensation contained in Decree No. published in the Official Gazette La Gaceta dated January

  • d)

    Income Tax that results from the form of calculation established in Article A of the Income Tax Law and its reform established in Decree No. published in the Official Gazette La Gaceta dated April

  • e)

    Apply the retention of one percent (1%) to national and foreign suppliers and contractors in accordance with Article of the Law on Strengthening of Income, Social Equity and Rationalization of Public Spending contained in Decree No. published in the Official Gazette La Gaceta dated April and its Erratum published in the Official Gazette La Gaceta dated May

  • f)

    Apply the Withholding of Income Tax for payments made to natural and legal persons, residents and non-residents in accordance with what is established in Articles and of the Income Tax Law

FISCALIZATION. In accordance with what is established in the Tax Code, the Secretariat of State in the Ministry of Finance through the General Directorate of Control of Franchises and Customs by itself or with the assistance of the Tax Administration and the Customs Administration must watch over the proper use and compliance of the purposes established in the Law.

SANCTIONING REGIME. The Secretariat of State in the Ministry of Finance, the Secretariat of State in the Ministry of Economic Development, the Tax Administration Service or other Institution of Central Government and the Municipalities within the scope of their jurisdiction must sanction the non-compliance with the obligations established and that derive from the application of the Law.

SWORN DECLARATION OF FISCAL SACRIFICE. The technical criteria and information that shall be contained in the form of the Sworn Declaration of Fiscal Sacrifice must be approved by Agreement by the Secretariat of State in the Ministry of Finance in coordination with the Tax Administration and the Customs Administration.

INDIVIDUAL MERCHANTS. In accordance with what is provided in Article of the Law and Article of the "Law for the Generation of Employment, Promotion of Entrepreneurial Initiative, Formalization of Business and Protection of the Rights of Investors" contained in Decree No. published in the Official Gazette La Gaceta dated June, Individual Merchants do not require any authorization or notification from any authority of the Central, Departmental or Municipal Government of the accounting books. Nor shall they pay any fee or tax related to said books. Accounting may be kept through computer systems that comply with the accounting standards required by the State without need for authorization or notification to any authority.

ADDITIONAL NORMS. The Secretariat of State in the Ministry of Finance in coordination with the Tax Administration shall by Agreement regulate everything not regulated in this Regulation.

VALIDITY. This Agreement shall enter into force on the day of its publication in the Official Gazette La Gaceta.