Law in Support of Micro and Small Enterprises
Congreso Nacional
- Decree: 145-2018
- Published: November 28, 2018
- Issuing body: Congreso Nacional
- Gazette: 34,806
- Category: Financial & Tax
Summary
This law grants tax benefits to new or formalized micro and small businesses during a 12-month period. Beneficiaries receive exemption from income taxes, municipal permits, and registration fees for 5 years, with the goal of generating jobs and strengthening the national economy.
Considerations
Whereas, in accordance with Article 351 of the Constitution of the Republic, the National Tax System shall be governed by the principles of legality, proportionality, generality, and equity, in accordance with the economic capacity of the taxpayer.
Whereas, it is the function of the State to ensure the balanced development of all productive sectors and to create opportunities on equal terms for the economic improvement of citizens. It is for this reason that the State recognizes the activity of Micro and Small Enterprise as being of public interest in order to promote employment, the social and economic well-being of all participants in these economic units.
Whereas, by Decree No. 135-2008 dated October 1, 2008, published in the Official Gazette La Gaceta on January 14, 2009, the Law for the Promotion and Development of the Competitiveness of Micro, Small and Medium Enterprises was approved.
Whereas, the Government of the Republic has carried out a series of properly planned actions to promote the creation and expansion of industry, commerce, and value-added services activities, with the purpose of generating an economic movement that translates into wealth generation for both entrepreneurs and their collaborators, which results in better living conditions for people and the creation of opportunities for the current and future Honduran labor market.
Whereas, Micro, Small and Medium Enterprises, as a transcendental axis of the country's economic engine, must be encouraged for their regularization and formalization in such a way that it contributes to the economic strengthening of the Nation, to the generation of new and better jobs, and to tax contributions to the Treasury.
Whereas, the stimulation of the Micro and Small Enterprise sector is achieved through a space of tax relief that allows, through the means of tax relief and the deregulation of administrative processes, the stimulation of the creation, organization, equipment, and operation of these businesses, with the condition of generating new and better jobs for the available labor market.
Whereas, in accordance with the Tax Code, laws that are approved after the effective date of said Code and that grant exemptions and exonerations must specify the objective of the measure, the beneficiary subjects, the formal and material requirements to be met by the beneficiaries, the duration of the benefit, the taxes dispensed, among others.
Articles
The purpose of this Law is to promote micro and small enterprises, through incentives that foster economic growth, by means of the creation of new employment opportunities, well-being, development and fulfillment of the human person; as well as an opportunity to reaffirm the entrepreneurial capacity and determination of Hondurans.
For purposes of this Law, the terms referenced herein shall be understood in the manner in which they are defined in the current legislation that governs the micro, small and medium enterprise sector.
Beneficiaries of this Law are micro and small enterprises that are newly established, or those that have been operating informally and are formalized, in compliance with the provisions of this Law, within a period of twelve (12) months counted from the date of entry into force of this Decree. Said registration or formalization may be carried out through any of the following mechanisms:
- 1)
Registration in accordance with the provisions of Decree No. 318-2013 dated January 15, 2014, containing the LAW FOR THE PROTECTION, BENEFITS AND REGULARIZATION OF INFORMAL ACTIVITY and its Regulations;
- 2)
Registration through the "MI EMPRESA EN LÍNEA" portal, in accordance with the provisions of Decree No. 284-2013 dated January 8, 2014, containing the LAW FOR EMPLOYMENT GENERATION, PROMOTION OF BUSINESS INITIATIVE, FORMALIZATION OF BUSINESSES AND PROTECTION OF INVESTORS' RIGHTS and its Regulations; and,
- 3)
Any other mechanism contained in the Commercial Code, other applicable laws, or this Law.
Merchants formalized under the provisions of this Law, or those who adopt its benefits, must obtain a special certificate generated through the "MI EMPRESA EN LINEA" portal authorized by the Secretariat of State in the Office of Economic Development, which may delegate this function to third parties. The certificate shall be valid for a maximum period of twelve (12) months and shall substitute, for that period, the operating permits issued by municipalities. In the same constitutive or formalization document, the intention to be bound by the regime of this Law must be declared. During this period, beneficiaries of this Law must process their corresponding national and municipal permits and licenses for their operation, with the warning that failure to do so shall result in forfeiture of the benefits granted by this Law. It is understood that during this period of time, any damages or losses of any nature caused by the operation of a micro and small enterprise shall be the responsibility of the beneficiary of this Law. The special certificate is the sole document accrediting the right to enjoy the benefits of this Law.
Merchants who are formally established and registered in any Public Commercial Registry and Chamber of Commerce in the country, regardless of their founding capital, and who are classified as a micro or small enterprise, shall be exempt from payment of Income Tax, Net Asset Tax and Temporary Solidarity Contribution, Prepayments of one percent (1%) and twelve point five percent (12.5%) as Income Tax; but they must be registered in an Exemption Registry maintained by the Secretariat of State in the Office of Finance in accordance with the Fiscal Responsibility Law. The following are not included in this exemption: Capital Gains Tax, Dividend Tax or any other form of profit participation, the Unique Tax of ten percent (10%) on Interest Income; the one percent (1%) advance payment for Income Tax that must be withheld from national and foreign suppliers and contractors, in accordance with Article 19 of Decree No. 17-2010 dated March 28, 2010, containing the LAW FOR STRENGTHENING REVENUES, SOCIAL EQUITY AND RATIONALIZATION OF PUBLIC SPENDING; income tax withholding rates for payments made to resident and non-resident natural and legal persons; and the Income Tax modality corresponding to one point five percent (1.5%) of declared gross income contained in Article 22-A of the Income Tax Law and its amendments.
Merchants who are formally established and registered in any Public Commercial Registry and Chamber of Commerce in the country, regardless of their founding capital, and who are classified as a micro or small enterprise, shall be exempt from Personal Tax and from Tax on Industry, Commerce and Services of the Municipalities. Likewise, they shall be exempt from payment of non-tax fees, surtaxes and charges for operating permits, construction permits, authorizations and environmental licenses, and shall also be exempted from registration fees of any kind that are processed before the Central Government and municipalities. This exemption of fees shall be extended and applied to the renewal or expansion of permits that must be requested during the validity period of the benefit established in the preceding Article.
Beneficiaries of this Law during a period of three (3) years, which may be extended for two (2) additional years at the request of the Secretariat of State in the Office of Economic Development, shall be exempt from payment of registration fees related to the act of enterprise establishment, municipal fees, charges for the issuance of administrative acts, licenses or other concepts necessary for its operation, which must be processed before public institutions, in addition to the benefits described in Articles 5 and 6 of this Law.
The incentives of this Law do not apply to services provided by independent professionals and Tertiary Economic Activities regulated by the State of Honduras. Independent professionals such as physicians, dentists, lawyers, certified public accountants, shall be exempt from payment and any type of fee in the processing of sanitary licenses and operating permits in municipalities.
Beneficiaries under this Law must present annually the Declaration of Fiscal Sacrifice, in accordance with the form approved by the Secretariat of State in the Office of Finance and the Tax and Customs Administrations as applicable.
Micro and Small enterprises established and in operation prior to the entry into force of this Decree may adopt and enjoy the benefits of this Law, provided they certify within a period of twelve (12) months from its entry into force the following requirements:
- 1)
The investment or reinvestment of capital, expansion of operations or any increase in industrial, production, commercial or service activity, which is reliably proven before the Secretariat of State in the Office of Economic Development that between the entry into force of this Decree and December 31, 2019, there has been an increase of thirty percent (30%) in the generation of new paid employment, compared against the payroll of paid employees in effect as of September 30, 2018;
- 2)
For the application of this benefit, authorization must be obtained from the Secretariat of State in the Offices of Labor and Social Security, prior to verification of the provisions in paragraph 1) of this Article; and,
- 3)
Not having annual gross income exceeding Five Million (L. 5,000,000) lempiras in the previous Fiscal Year. After obtaining the special certificate, the beneficiary must register in the Exemption Registry of the Secretariat of State in the Office of Finance. Micro and Small Enterprises that adopt the benefit of this Article shall be exempt from payment of fees for services provided by municipalities.
In accordance with the Tax Code, the Secretariat of State in the Office of Finance, by itself or with the assistance of the Tax Administration and the Customs Administration, must ensure the proper use and compliance with the purposes contained in this Law. In case false or inaccurate data and information is proven, or abuses in the fiscal benefits granted, proceedings must be conducted in accordance with the provisions of the same Code.
The following are not beneficiaries of this Law: legal entities that have partners, shareholders or social participants who are natural persons already part of another commercial company engaged in an equal activity or who have been part of another company engaged in a similar activity. Likewise, micro or small enterprises shall not enjoy the benefits of this Law if they include within their social participation legal entities, regardless of their category, and legal entities that include within their social organization as partners, shareholders or social participants natural persons who were partners, shareholders or social participants of a legal entity engaged in a similar activity and has been dissolved, liquidated or closed its operations from the date of entry into force of this Law. To ensure compliance with this provision, the Tax Administration Service (SAR) must verify this matter in its databases.
Credit access programs or financial inclusion programs may allocate venture capital funds that have, by their nature, differentiated default levels, in order to rebuild their credit history and provide access to financing for persons or enterprises that do not have access to the traditional financial system. Credit access programs may contribute to mutual guarantee fund management companies and request their services.
To verify employment generation resulting from the fiscal incentive, the Secretariat of State in the Offices of Labor and Social Security must present an annual report to the Secretariat of State in the Office of Finance and to the Tax Administration Service (SAR), in order to measure fiscal returns on tax expenditures.
The Secretariat of State in the Office of Finance, in coordination with the Secretariat of State in the Office of Economic Development and the Tax Administration Service (SAR), must issue the Regulations of this Law, within a period not to exceed thirty (30) days after its entry into force.
To authorize the Honduran Bank for Production and Housing (BANHPROVI) in its capacity as Trustee of the Trust for Administration and Investment executed with the Central Bank of Honduras (BCH) so that it may, through the secondary market, negotiate the sale at a discount of financial instruments that, under the modality of bonds issued by the State Secretariat of the Finance Office, are invested with funds from the Trust of the Central Bank of Honduras (BCH).
The provisions contained in Decree No. 284-2013, dated January 8, 2014, relating to the registration procedure, payment of registration fees, authorization of books, issuance of permits, licenses, and other matters related to the operation of the enterprise, are extended to Individual Merchants.
To reform Article 1 of Decree No. 57-2013 dated April 16, 2013, published in the Official Gazette "La Gaceta" on May 31, 2013, which reforms Decree No. 175-2008 dated December 18, 2008, published in the Official Gazette "La Gaceta" on December 23, 2008, containing the LAW OF FINANCIAL SUPPORT FOR THE PRODUCTIVE SECTORS OF HONDURAS, which shall read as follows:
To authorize the Central Bank of Honduras (BCH) so that in an exceptional manner and with an emergency character, within the framework of the LAW OF FINANCIAL SUPPORT and its amendments, it shall enable financial resources in the amount of THIRTEEN BILLION LEMPIRAS (L.13,000,000,000.00) channeled through the Honduran Bank for Production and Housing (BANHPROVI) and allocated in accordance with Law, to Financial Support of the National Banking System and other authorized and regulated financial institutions by the National Commission of Banks and Insurance (CNBS) and savings and credit cooperatives supervised and regulated by CONSUCOOP and furthermore all those institutions qualified as eligible by BANHPROVI; with the purpose of financing the housing sector in a forty percent (40%); the readjustment, refinancing and rehabilitation of productive units affected by natural phenomena and by crises that negatively impact the national economy; in a twenty percent (20%); and, to microcredit and other productive sectors in a forty percent (40%), these percentages may be varied depending on the credit demand of the benefited sectors".
To reform subsection b) of Article 2 of Decree No. 175-2008 dated December 18, 2008, published in the Official Gazette "La Gaceta" on December 23, 2008, which shall read as follows:
To empower the Central Bank of Honduras (BCH) so that with the resources indicated in the preceding Article, it shall establish a Trust for administration and investment in the Honduran Bank for Production and Housing (BANHPROVI), under the following conditions:
- a)
Amount: ...;
- b)
Term: From thirty (30) to fifty (50) years;
- c)
Purpose: ...;
- d)
Trustor and Beneficiary: ...;
- e)
Trustee: ...;
- f)
Trustee Commission: ...; and,
- g)
Treatment of Trust Income: ...
The State Secretariat of the Finance Office is instructed to transfer the necessary resources from the National Budget of Income and Expenditures of each year for the financing of the Executing and Managing Unit of the electronic platform "MY COMPANY ONLINE" that is managed through the National Program for Employment Generation and Economic Growth Honduras 2020. The National Program for Employment Generation and Economic Growth Honduras 2020, contained in Decree No. 36-2016 dated April 14, 2016, must develop and manage other self-sustaining electronic or technological platforms that promote innovation, entrepreneurship, access to credit, as well as other digital services that contribute to administrative simplification, cost and time reduction in the procedures managed by natural and legal persons, giving priority to factors that impact compliance with sustainable development objectives and improvement of the country's competitiveness; and allowing citizens timely and decentralized access to information.
To authorize the Honduran Bank for Production and Housing (BANHPROVI) in its capacity as Trustee of the Trust for Administration and Investment executed with the Central Bank of Honduras (BCH) so that it may, through the secondary market, negotiate the sale at a discount of financial instruments that, under the modality of bonds issued by the State Secretariat of the Finance Office, are invested with funds of the Trust of the Central Bank of Honduras (BCH).
This Decree shall enter into force as of the day of its publication in the Official Gazette "La Gaceta". Given in the City of Tegucigalpa, municipality of the Central District, in the Hall of Sessions of the National Congress, on the seventh day of the month of November of two thousand eighteen. MAURICIO OLIVA HERRERA PRESIDENT JOSÉ TOMÁS ZAMBRANO MOLINA SECRETARY ROSSEL RENAN INESTROz SECRETARY To the Executive Branch For Enforcement: Let it be executed. Tegucigalpa, M.D.C., November 28, 2018. JUAN ORLANDO HERNÁNDEZ ALVARADO PRESIDENT OF THE REPUBLIC THE SECRETARY OF STATE IN THE FINANCE OFFICE ROCIO IZABEL TABORA
Related laws
- Reform of the First Paragraph of Article 3 of the Micro and Small Business Support Law — This law reforms the Law to Support Micro and Small Enterprises to expand who can benefit: it now includes informally operating businesses that formalize within 24 months. It aims to help small business owners through tax relief and reduced administrative procedures to create jobs and strengthen the national economy. (Decree 147-2019, 2018)
- Regulations of the Law for Support of Micro and Small Business — This regulation facilitates the formalization of microenterprises (1-10 employees) and small enterprises (11-50 employees) in Honduras, granting them tax exemptions for 5 years on income tax, net asset tax, and municipal registration fees. Business owners can formalize through the SAR or Mi Empresa en Línea platform, obtaining a certificate that allows them to operate legally and access benefits, as long as they comply with obligations such as annual registration and municipal licensing. (Decree 145-2018, 2018)
- Special Law on Economic Reactivation Through Support for Microenterprises — This law helps small and medium-sized business owners access credit again by allowing banks to refinance debts of up to US$25,000 without penalizing their credit history. The State contributes 100 million lempiras annually (2013-2017) to guarantee funds to support these loans and facilitate access to formal financing. (Decree 155-2012, 2013)
- Necessity of Compliance with the Micro and Small Business Support Law Regime Property Institute — This instruction requires commercial registrars to apply the Law Supporting Micro and Small Businesses by allowing companies to access its benefits (exemption from registration fees) simply by declaring in writing their willingness to comply with this law, without requiring additional documentation. (Decree 145-2018, 2018)
- Decreto Legislativo No. 145-2018 — Ley de Apoyo a la Micro y Pequeña Empresa (Decree 145-2018, 2018)