Law on Social Contribution of the Social and Solidarity Economy Sector
Congreso Nacional
- Decree: 131-2018
- Published: February 26, 2019
- Issuing body: Congreso Nacional
- Gazette: 34,881
- Category: Financial & Tax
Summary
This law creates a special tax system for social economy organizations (such as cooperatives and associations). It exempts them from income tax starting in 2019, but requires them to pay a "Social Contribution" of 15% on their annual profits. It also gives them 4 months to settle previous tax debts without penalties.
Considerations
Whereas, in accordance with Article 351 of the Constitution of the Republic, the tax system shall be governed by the principles of legality, proportionality, generality and equity, in accordance with the taxpayer's economic capacity.
Whereas, Article 1 of Decree No. 193-85 dated October 31, 1985, published in the Official Gazette "La Gaceta" on January 11, 1986, containing the LAW OF THE SOCIAL SECTOR OF THE ECONOMY, declares of public interest the organization, promotion and development of the Social Sector of the Economy, to contribute to making the economic and social development of the country more humane, in accordance with the principles of efficiency in production, social justice in the distribution of wealth and national income, democratic and harmonious coexistence in the diverse forms of property and enterprises that sustain the Economic System of Honduras, in accordance with the Constitution of the Republic.
Whereas, it is necessary that natural or legal persons who are part of the Social Sector of the Economy regularize their tax situation with the Treasury.
Whereas, in accordance with Article 205 Attribution 1) of the Constitution of the Republic, it is within the power of the National Congress to: create, decree, interpret, reform and repeal laws.
Whereas, the Constitution of the Republic establishes in Article 340 that the technical and rational exploitation of the Nation's natural resources is declared to be of public utility and necessity. The State shall regulate its utilization in accordance with the social interest and shall set the conditions for its granting to private parties.
Whereas, the Regulation of the National System for Environmental Impact Assessment regulates the identification, evaluation, design and implementation of Environmental Measures applicable to the social and economic activities developed by institutions and companies of all sizes that fall within the Categorization Table.
Whereas, as a consequence of the accumulation of expenses, fines and surcharges plus environmental works, many companies face difficulties in renewing their environmental licenses, thereby approaching the possibility of closure of their operations. A large part of these companies are part of the national food agroindustry system, which supplies products for the basic food basket and for export.
Articles
Grant a period of four (4) months counted from the effective date of this Decree for legal entities that are operating under the LAW OF THE SOCIAL SECTOR OF THE ECONOMY not included in Decrees No. 53-2015 dated April 29, 2015 and 92-2015 dated September 8, 2015, to comply with their corresponding tax and customs obligations for the fiscal periods 2014, 2015, 2016, 2017 and 2018 free from the payment of penalties, interest and surcharges accrued as of the effective date of this Decree.
As of Fiscal Year 2019, legal entities that are operating under the LAW OF THE SOCIAL SECTOR OF THE ECONOMY not included in Decrees No. 53-2015 and 92-2015 are not subject to the payment of Income Tax and related and collateral taxes. Exemption from payment of Income Tax does not exempt them from the duties to file declarations, retain taxes where applicable, and other obligations established in other special laws in tax or customs matters. For the purposes of application of this Law, Income Tax shall be understood to mean that regulated in the Law on Income Tax and its reforms.
There is hereby created "THE SOCIAL CONTRIBUTION OF THE SOCIAL SECTOR OF THE ECONOMY," which must be paid annually within three (3) months following the close of the prior fiscal period, as applicable, for legal entities that are operating under the Law of the Social Sector of the Economy not included in Decrees No. 53-2015 dated April 29, 2015 and 92-2015 dated September 8, 2015. The Social Contribution is fifteen percent (15%) of the net surpluses or net profits generated in the prior fiscal period, understanding by net surplus or net profit that which derives from the difference between total income, less: 1) Total expenses directly related to the generation of such income; and, 2) Funds for:
- a)
Capitalizations;
- b)
Reserves for cases of losses or legal reserves;
- c)
Housing, education and health;
- d)
Social welfare and training; and,
- e)
Donations duly documented. Income received by a legal entity operating under the Law of the Social Sector of the Economy not included in Decrees No. 53-2015 and 92-2015, in the form of dividends or any other form of participation in the surpluses or profits of another legal entity operating under the aforementioned laws, shall not be subject again to the Social Contribution of the Social Sector of the Economy. For this purpose, legal entities shall maintain a separate account of the amounts received for such purpose, with indication of the origin to which they correspond. The Social Contribution established in this Article shall apply starting from Fiscal Year 2019 and shall be paid in the manner established for such purposes by the Tax Administration. The collection, oversight and collection of the Social Contribution of the Social Sector of the Economy shall be the responsibility of the Tax Administration.
In case of non-compliance with this norm regarding the Social Contribution of the Social Sector of the Economy, regulated in this Decree, the sanctions established in the current Tax Code shall be applied.
Within a period of six (6) months counted from the day of publication of this Decree, all legal entities operating under the Law of the Social Sector of the Economy, not included in Decrees No. 53-2015 and 92-2015, must register in the unified registry of the Property Institute (IP), created by Decree No. 46-2016 dated April 26, 2016, published in the Official Gazette "La Gaceta" on April 27, 2016.
The Ministry of State in the Office of Finance must, within a period not to exceed twenty (20) business days from the effective date of this Decree, issue the Regulations for the application of the provisions of this Law.
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 Sessions Hall of the National Congress, on the seventh day of the month of November of two thousand eighteen. MAURICIO OLIVA HERRERA PRESIDENT
Legislative Branch DECREE No. 133-2018 THE NATIONAL CONGRESS, WHEREAS: The Constitution of the Republic establishes in Article 340 that the technical and rational exploitation of the Nation's natural resources is declared to be of public utility and necessity. The State shall regulate its use in accordance with the social interest and shall establish the conditions for its granting to individuals. WHEREAS: The Regulation of the National System of Environmental Impact Assessment regulates the identification, evaluation, design and implementation of Environmental Measures applicable to social and economic activities developed by institutions and companies of all sizes that fall within the Categorization Table. WHEREAS: As a consequence of the accumulation of expenses, penalties and surcharges plus environmental works, many companies face difficulties in renewing their environmental licenses, thereby approaching the possibility of closure of their operations. A large part of these companies are part of the national food agroindustry system, which supplies products for the basic food basket and for export. JOSÉ TOMÁS ZAMBRANO MOLINA SECRETARY SALVADOR VALERIANO PINEDA SECRETARY To the Executive Branch Therefore: Let it be executed. TEGUCIGALPA, M.D.C., December 28, 2018. JUAN ORLANDO HERNÁNDEZ ALVARADO PRESIDENT OF THE REPUBLIC THE SECRETARY OF STATE IN THE OFFICE OF FINANCE.
Related laws
- Decreto Legislativo No. 53-2015 — Exención del Impuesto Sobre la Renta para Cooperativas y creación de Contribución Social del Sector Cooperativo — This law exempts legally registered cooperatives from paying income tax, but creates a new social contribution of 15% on their profits (or 0.5% if they have losses) that must be paid annually. The collected money funds social programs to reduce poverty. (Decree 53-2015, 2015)
- Regulations of the Social Contribution of the Economy Law — This regulation establishes a 15% tax on net profits of cooperatives and social economy enterprises. It applies to worker organizations that share ownership of production means, excluding certain special categories. Companies must declare and pay this tax within three months after closing their fiscal year. (Decree Acuerdo No. 567-2019, 2019)
- Law on the Contribution of the Social and Solidarity Economy Sector — This law allows social economy organizations (cooperatives, associations) to settle past tax debts without penalties within 4 months. Starting in 2019, they are exempt from income tax but must pay an annual "social contribution" of 15% of net profits, intended for social development. (Decree 131-2018, 2019)
- Decreto Legislativo No. 92-2015 — Reforma tributaria de cooperativas - exoneración del ISR y contribución social — This law exempts legally registered cooperatives from paying Income Tax and Net Asset Tax starting in 2014. Instead, they must pay a Social Contribution of 15% on their gross profits (or 0.5% if they have losses). The law forgives tax debts from before 2014 and gives cooperatives 60 days to catch up on payments without penalties. (Decree 92-2015, 2015)
- Law on Assistance to the Productive Sector and Workers for the Effects of the Covid-19 Pandemic — This law authorizes emergency fiscal, labor, and financial measures to protect businesses and workers during the COVID-19 pandemic. It extends tax payment deadlines, authorizes public credit for health emergency funds, flexibilizes financing at BANHPROVI for productive sectors, establishes solidarity contributions for suspended workers, and accelerates digital transformation in telecommunications. (Decree 33-2020, 2020)