Law on Efficiency in Revenue and Public Spending

PURPOSE. The purpose of this Law is to establish mechanisms to ensure efficiency in income through the control and restriction of exemptions and anti-evasion measures; as well as the control of public expenditure to capture resources to be allocated to social programs within the framework of the National Vision Plan, Decree 286-2009.

EXECUTION. The resources of the Fund for Social Programs shall be executed through the Trust created for this purpose by means of Decree No. 87-2011, dated June 9, 2011, with an accountability system that allows the population to know the results achieved in a transparent manner. TITLE II EFFICIENCY IN INCOME FROM THE SALES TAX CHAPTER I ON THE SALES TAX

RETURN OF SALES TAX FOR PURCHASES WITH DEBIT OR CREDIT CARDS. Natural persons who acquire, through credit or debit cards, goods or services subject to sales tax, shall have the right to a return of eight percent (8%) of the amount of sales tax actually paid, in the manner and conditions established by the regulation issued by the Executive Revenue Directorate (DEI). The companies issuing or operating credit or debit card services and concessionaires are responsible for processing the sales tax return and reporting on these transactions in the manner and conditions established by the regulation issued by the Executive Revenue Directorate (DEI). The companies issuing or operating credit or debit card services and concessionaires shall have sixty (60) calendar days to adapt their systems and thirty (30) calendar days for normal operation. The Legislative Branch, the Executive Branch, and banking organizations must conduct awareness campaigns to users for the use of Debit and Credit Cards.

COMPLEMENTATION. To complement the provisions regarding the withholding of Sales Tax set forth in Article 8 of the Sales Tax Law and its amendments with the following obligations:

• 1)

  Issuers, Operators, and Service Concessionaires of Credit Cards (OTCD) shall respond jointly and severally, solely for the withholding of Sales Tax when it has been reported by affiliated businesses, when they receive payment with the use of credit or debit cards from their customers;

• 2)

  OTCD must adjust their systems to make mandatory in each transaction carried out by affiliated establishments the discrimination of the amount corresponding to Sales Tax caused, even when it equals zero (0);

• 3)

  Businesses or affiliated establishments must register the amount caused by Sales Tax, even when it equals zero (0), under the understanding that if they do not, OTCD shall do so automatically;

• 4)

  OTCD must apply twelve percent (12%) automatically on the total amount when there is no discrimination of sales tax caused in the transactions of goods and services subject to tax by their affiliates;

• 5)

  Establishments or businesses affiliated that carry out all of their transactions without causing Sales Tax must file with the Executive Revenue Directorate (DEI) a resolution for exclusion from this regime; this exclusion must be communicated directly by the Executive Revenue Directorate (DEI) to the Issuers, Operators, and Service Concessionaires of Credit Cards (OTCD);

• 6)

  The Issuers, Operators, and Service Concessionaires of Credit Cards (OTCD) must remit through the banking system all amounts withheld each month, no later than within the first ten (10) calendar days of the following month in which the withholding was made; such payments shall be presented through the means that the Executive Revenue Directorate (DEI) determines; and,

• 7)

  Issuers, Operators, and Service Concessionaires of Credit Cards (OTCD) that do not comply with the above shall be held administratively, civilly, and criminally liable.

TAX CREDIT. The tax credit generated in purchases subject to Sales Tax (ISV) shall not be subject to return or offset against another tax, and must be consumed until completely exhausted; if the taxpayer, upon closing activities, has not exhausted their accumulated ISV tax credit, this shall be consolidated in favor of the state treasury. TITLE III EFFICIENCY IN EXPENDITURES AND INCOME CHAPTER I REDUCTION OF EXPENSES AND LOSSES

PUBLICATION OF DELINQUENCY. The National Electric Energy Company (ENEE), National Telecommunications Company (HONDUTEL), National Autonomous Aqueducts and Sewage Service (SANAA), Honduran Postal Company (HONDUCOR), the National Port Company (ENP), the Executive Revenue Directorate (DEI), and the Central Public Administration are ordered to publish firm, liquid, and enforceable delinquent debts on their web pages and/or in the credit reporting agencies that operate in the country.

TRUST FOR DELINQUENCY. For the purpose of recovering debts owed to entities of the Centralized, Decentralized, and Deconcentrated Public Administration, each of them is authorized to proceed, through public invitation, to establish trusts in the National Banking System, in order to immediately proceed with the transfer of accounts receivable with the character of firm, liquid, and enforceable to the management of the trust, with the "FUND FOR SOCIAL PROGRAMS" as beneficiary. The State Department of Finance shall issue an opinion on the feasibility of establishing the trust, and shall act as Coordinator of the Trust's Technical Committee.

REDUCTION OF LOSSES. The National Electric Energy Company must present within a period of sixty (60) calendar days to the National Congress a plan for the reduction of its losses; it must likewise develop a program for the recovery of delinquent debts that exhausts all collection methods, for which it may also use the modality of Public-Private Partnerships (APP). Both programs shall be a condition for the approval of new projects related to its operations.

REDUCTION OF EXPENSES. All regulated entities must reduce their current expenditure by an amount not less than twenty-five percent (25%) in their budgets for the following two fiscal years. Unexecuted amounts of the budgets of regulating entities must be transferred semi-annually to the FUND FOR SOCIAL PROGRAMS by the State Department of Finance with prior supervision and oversight of Budget Commission I and Budget Commission II of the National Congress of the Republic, in an amount not less than Twenty-five Percent (25%). With respect to the budget of the National Commission of Banks and Insurance (CNBS), such transfer shall be in an amount not less than Fifty Percent (50%). In the event that the deadlines for the execution of the projects do not align with the reality thereof, the aforementioned Commissions shall have the power to issue a ruling on its reprogramming.

TRANSFERS. Authorize the State Department of Finance to transfer semi-annually in automatic form twenty-five percent (25%) of the unexecuted or non-committed values of national funds available to each entity of the Central, Decentralized, and Deconcentrated Administration, from the allocations appearing in the General Budget of Income and Expenditures of the Republic, to Institution 449, Financial Services of the Central Administration, for the purpose of establishing in said Institution the FUND FOR SOCIAL PROGRAMS, referred to in the following Title. The items to be affected for the purposes of this Article shall be those detailed as follows: PERSONAL SERVICES 11800 Stipends 12910 Special Contracts 12990 Other Personal Services 14200 Representation Expenses Abroad (Except for the State Department in the Offices of: Foreign Affairs, Industry and Commerce.) 14300 Representation Expenses in the Country 14400 Representation Expenses Abroad for Officials NON-PERSONAL SERVICES 22240 Rental of Educational Equipment 22250 Rental of Computing Equipment 22270 Rental of Communications Equipment 22400 Rights on Intangible Assets 22500 Rental of Communication Spaces 24200 Studies, Research, and Feasibility Analysis 24500 Training Services 24600 Computing and Computer Systems Services 24900 Other Technical Professional Services 25300 Printing, Publication, and Reproduction Service 25600 Advertising and Propaganda 25900 Other Commercial and Financial Services 26110 Domestic Airfares 26120 Foreign Airfares 26210 Domestic Travel Allowances 26220 Foreign Travel Allowances 29100 Ceremonial and Protocol MATERIALS AND SUPPLIES 31100 Food and Beverages for Persons (Except for the Secretaries of Health, Security, National Defense, Interior and Population, Labor and Social Security, and Social Development) 33100 Writing Paper 33200 Computer Paper 33300 Graphic Arts Products 33400 Paper and Cardboard Products 33500 Books, Magazines, and Newspapers 35610 Gasoline 35620 Diesel 35630 Kerosene 35640 LPG Gas 35650 Oils and Lubricating Greases 36400 Minor Tools 36910 Tinplate Products 37300 Crockery and Porcelain Products 37400 Cement, Asbestos, and Plaster Products 39200 Office, Office, and Teaching Supplies CAPITAL ASSETS 42110 Various Office Furniture 42120 Various Office Equipment 42140 Home Appliances 42200 Machinery and Production Equipment 42300 Transport, Traction, and Lifting Equipment 42500 Communication and Signaling Equipment 42600 Computing Equipment 42720 Recreational and Sports Equipment 42800 Major Tools and Spare Parts 43100 Books and Magazines 43200 Records and Other Sound Units 43300 Films and Other Image and Sound Units 43900 Other Collectible Items. The application of this Article is excepted for those entities already authorized in previous legal provisions to be able to invest their savings. CHAPTER II STATE PURCHASES BY ELECTRONIC AUCTION

AUCTION. In order to achieve savings in State purchases, the State Department of Finance is instructed to present within a period of sixty (60) calendar days to the National Congress a project that allows the State to apply the mechanics of purchases and acquisitions through Reverse Public Electronic Auction via the Internet, where the Central Administration, decentralized and deconcentrated entities of the State of Honduras receive offers from suppliers in open bidding of prices downward for their corresponding binding award. The State of Honduras shall publish the auction results through the same means. CHAPTER III MEASURES RELATED TO INCOME TAX

DEDUCTIBILITY CONDITION. Payments for the concepts detailed in Article 5 of the Income Tax Law may be accepted as deductible insofar as the effective rendering of services received is demonstrated.

INCOME TAX ADVANCE. The Executive Revenue Directorate (DEI) is authorized to act as agent for the collection of one percent (1%) of Income Tax (ISR) in definitive import operations, carried out by natural or legal persons, as an advance on said tax, with the exceptions for persons referred to in Article 7 of the Income Tax Law and its amendments. Such collection shall be five percent (5%) when the importer is in default of the Income Tax (ISR) Declaration or is delinquent in this tax or any other tax. The Executive Revenue Directorate (DEI) shall regulate the application of this Article.

CAPITAL GAINS. Capital gains obtained by natural or legal persons, domiciled or not in Honduras, must pay the flat rate of ten percent (10%), whereby they are not subject to the progressive rate of Income Tax. Payment of tax on capital gains shall be made for each transaction within ten (10) business days following the day the money was received or through the means and forms established by the Executive Revenue Directorate (DEI). The taxpayer must present to the Executive Revenue Directorate (DEI) the annual statement for this purpose no later than April 30 of the following fiscal year that is being reported. Capital losses occurring in a fiscal year shall be offset against capital gains in the same fiscal year. Capital gains are those resulting from the transfer, assignment, purchase-sale, or other form of transaction of goods or rights, carried out by individuals or legal persons, whose normal business is not to trade in said goods or rights. For these purposes, gains or losses resulting from the sale of the taxpayer's principal residence are not considered. In exchange or swap operations, both parties are subject to the payment of tax and each must establish its gain by the value in the transfer of goods exchanged or swapped. For the calculation of this tax, the value of the transaction shall be that agreed upon by the parties, provided that it is not less than market value, deducting proven improvements and legalization expenses. When the sale of real property or rights and securities is carried out by a non-resident, the acquirer must withhold two percent (2%) of the value of the transfer of ownership on account of this tax. Said amount must be paid within two (2) calendar days following the transaction through the means established by the Executive Revenue Directorate (DEI). The application of this tax is excepted for entities that reorganize commercially by merger, absorption, transfer, or split at the time of their change. Capital losses occurring from gambling games and self-consumption are excepted from being accounted for within capital losses. Capital gains or losses are not considered those caused by:

• 1)

  The separation of profitable assets;

• 2)

  The division of co-ownership of a property or a right, without prejudice to the preservation of the historical value thereof; and,

• 3)

  The reduction of capital with return of contributions provided that they are used and not previously distributed. 14) Weighing and control scales; and/or, 15) Others that may be regulated by Agreement.

CONTROL OF FUEL INVENTORIES. In order to control the movements of inventories of fuel importers and distributors, the importation thereof must be made under the customs deposit regime for its subsequent nationalization, in accordance with the rules established by the Executive Revenue Directorate (DEI). CHAPTER V RECOVERY OF DEBTS

DISCOUNT OF DEBT SECURITIES. The Executive Revenue Management Office (DEI) is empowered to proceed, through public invitation, to establish trusts in the National Banking System, in order to immediately proceed with the assignment of accounts receivable with the character of firm, liquid, and enforceable to the management of the trustee, with the State as beneficiary who will receive the funds through the General Treasury of the Republic. The State Secretariat in the Office of Finance shall issue an opinion on the viability of establishing the trust, and shall in turn act as Coordinator of the Technical Committee thereof. The Executive Revenue Management Office (DEI) may discount Executive Debt Securities with liquid amounts and their corresponding interest, before the national financial system, at the discount rate in effect in such system. This Article shall be developed in the regulation of the present Law.

RETENTION BY JUDGMENTS. Institutions against which there are firm final judicial condemnatory sentences are obligated to pay the amounts arising therefrom from their own budget; otherwise, the State Secretariat in the Office of Finance may retain the corresponding amounts through generation of own resources, transfers of percentages by law, or any other concept until the total amount of the claim is paid or payment arrangements are established. From the amounts that State institutions pay to natural or legal persons arising from firm final judicial sentences issued by the Judicial Bodies, the corresponding taxes must be deducted in accordance with the statement issued for that purpose by the Executive Revenue Management Office (DEI), in cases that apply; labor benefits are excepted from this provision (other elements perceived as indemnities). No institution of any of the three (3) Branches of State or other entities of the Public Sector in general may make any payment of judicial sentences while the Executive Revenue Management Office (DEI) does not certify that the claimant is solvent in the payment of its obligations with the Tax Authority. In the case of existing tax obligations, the Executive Revenue Management Office (DEI), prior communication to the entity that will make the payment, shall notify or the amounts that shall be deducted to comply with such tax obligations. If the institution does not comply, the Executive Revenue Management Office (DEI) may request the State Secretariat in the Office of Finance to make the retentions that correspond. The Administrator or administrative manager who omits or violates this provision shall be administratively, civilly, and criminally responsible for the damages caused to the Tax Authority.

SOLVENCY. No institution of the Public Sector in accordance with the State Contracting Law and Budget Provisions may contract commitments exceeding Twenty-Five Thousand Lempiras (L.25,000.00) for the acquisition of goods and services if suppliers or contractors do not accredit, by means of a Certificate of Solvency issued by the Executive Revenue Management Office (DEI), that they are solvent in the payment of tax obligations; such Certificate must be issued by the Executive Revenue Management Office (DEI) within three (3) business days after the request is submitted. Likewise, the Executive Revenue Management Office (DEI) may determine ex officio that a public State institution retain amounts for the purpose of payment to a third party, if it is accredited that it is not solvent in the payment of its taxes and tax obligations. The Administrator or Administrative Manager who omits or violates this provision is responsible for the damages caused to the Tax Authority.

ADMINISTRATIVE MEASURES. The Executive Revenue Management Office (DEI) is empowered to impose administrative measures against any taxable person who is not solvent in the fulfillment of their material obligations, and that these have the character of firm, liquid, and currently enforceable, proceeding to:

• 1)

  Suspend their import activities, except those imports whose order was made before the effective date of the present Law;

• 2)

  Suspend or request suspension of the granting of exemptions, privileges, or tax benefits, by converting to suspend the use of the mechanisms used for the enjoyment of such exceptions, privileges, or benefits; and,

• 3)

  Without prejudice to what is provided in other laws, suspend the commercial, industrial, or any other activities of the taxable person, while they do not regularize their tax situation. Without prejudice to the actions that the Public Ministry or the Office of the Attorney General of the Republic may take in the prosecution of tax crimes, the Executive Revenue Management Office (DEI) is authorized to seize goods, products, and merchandise introduced into the country in violation of current tax and customs regulations, or that are commercialized without complying with applicable tax obligations. Seized goods, products, or merchandise shall be returned to their owners once payment of the applicable taxes, fees, or rights (fines and sanctions) is accredited. The Executive Revenue Management Office (DEI) shall regulate the cases and manner of proceeding regarding those goods that are not claimed after a period of two (2) months from having been seized, in order to proceed with their sale through auction, donation, destruction, or recovery by the State itself. These measures shall be taken exceptionally in those cases where there is evident resistance to compliance with tax obligations. The same shall be authorized by means of a duly reasoned and justified resolution. The Executive Revenue Management Office (DEI) shall communicate immediately to the State Secretariat in the Office of Finance the measures imposed individually in each case.

PROCEDURAL EFFICIENCY. In application of the principle of procedural efficiency in administrative proceedings, no charges shall be imposed for debts of minimal amount. The value of minimal amount shall be communicated by the State Secretariat in the Office of Finance to the Executive Revenue Management Office (DEI).

REGISTRATION AND COMPENSATION OF TAX ARREARS. The State Secretariat in the Office of Finance is authorized so that, jointly with the Executive Revenue Management Office (DEI), it may compensate the tax arrears registered against Public Sector institutions with the debts for public services and retentions that the State maintains with them; such compensation shall be recorded in the accounts as a tax revenue. The State Secretariat in the Office of Finance may authorize the compensation of tax debts for real property prior to valuation in application of the procedures established in the National Property Law.

INCOME RECORD. In the case of administrative and/or judicial claims against the State of Honduras for accrued interest, emergent damages, and lost profits, the claimant must present to the competent Court a certification issued by an audit firm authorized by the National Banking and Insurance Commission (CNBS), stating that such amount is recorded in the accounting and in the sworn declaration of Income Tax for the corresponding fiscal year. No judicial court shall admit a claim or legal reclamation if the claimant does not prove the aforementioned certification. The audit firms that issue the aforementioned certifications shall be civilly and criminally responsible to the State of Honduras for the truthfulness of the data contained therein, including the sanction imposed by the competent judge, which shall consist of the immediate suspension of the professional practice of the responsible firm and its partners before the respective Professional College and before the National Banking and Insurance Commission (CNBS), as applicable.

EXECUTION OF JUDGMENTS. The execution of judicial sentences issued by the Judicial Bodies that are firm shall issue the corresponding Judicial Communication with the standard insertions and the respective order by the Secretary of the Judicial Body, so that Public Sector institutions make the necessary budget provisions in their respective budgets, which should not be allocated for any other purpose. Prior to paying firm judicial sentences, the State Secretariat in the Office of Finance shall request from the Executive Revenue Management Office (DEI) the calculation of taxes owed and those that would result from the liquid amount of the claim in favor of the prevailing party, in order to perform the automatic deduction of the total amount to be paid in favor of the State through the General Treasury of the Republic. In the application of Articles 97, 98, 99, and 100 of the Administrative Litigation Law, the State shall begin to pay the commercial and statutory interest on judicial sentences by which the State of Honduras is condemned to pay liquid amounts and their respective interest, as of the beginning of the execution procedure by means of enforcement, and must strictly respect that the patrimony of the State is non-attachable by the sufficient guarantee that its own nature recognizes. CHAPTER VI REGULARIZATION

REGULARIZATION OF THE SINGLE VEHICLE REGISTRATION FEE. Authorization is granted on an exceptional basis so that during the course of the present year, periods prior to 2011 of the Single Fee for Vehicle Registration may be paid without the application of fines or surcharges provided that it is made in a single payment for the total debt.

REGULARIZATION IN THE INTERNATION OF VEHICLES. Authorization is granted on an exceptional basis so that during the following one hundred twenty (120) business days from the effective date of the present Law, the nationalization of vehicles that entered the country before the enactment of the present Law is permitted, within the framework of the free circulation treaties of the Central American Integration System (SICA), and that have license plates from other countries in the region (Guatemala, El Salvador, and Nicaragua) regardless of the vehicle age restriction.

INALIENABILITY. In accordance with the Customs Franchises Law and current Tax Code, tax exemptions and exonerations are personal, that is, they are for the exclusive use of the beneficiary, so that all those legal provisions that contain that such benefit may be transferred to a third party are expressly repealed by the present Law. Motor vehicles entered into the country exonerated of taxes must regularize the payment of taxes at the time of their sale to non-exempt third parties. As of the effective date of the present Law, donations from abroad intended for private volunteer organizations of public interest without profit motive and registered in the country may only be exonerated when these are received in kind.

RESOLUTIONS. The State Secretariat in the Office of Finance, in accordance with Law, shall authorize exonerations, exemptions, and other tax franchises granted by present and future special laws prior to the optional opinion of the State Secretariats and other competent entities without these opinions having binding character. The resolution issued by the State Secretariat in the Office of Finance, provided that the beneficiary proves to be solvent with the State, shall be the sufficient document to accredit the authorized exoneration, exception, or franchise, so that no State institution should require the processing of another declarative or evidentiary document.

CONTROL. The Executive Revenue Management Office (DEI) may enter into agreements with institutions of the National Financial System to control the tax exonerations or exemptions granted to natural or legal persons. The Executive Revenue Management Office (DEI) is the entity empowered to establish the forms, means, and controls that should be applied in the granting of the tax benefits authorized by the State Secretariat in the Office of Finance.

REFORM. To reform Articles 1, 2, and 4 of the Law of the "Temporary Import Regime" contained in Decree No. 37-84 of December 20, 1984 and its reforms, which shall hereafter read as follows:

To establish a Temporary Import mechanism, in order to promote exports, consisting of the suspension of payment of Duties and Taxes that cause the import of:

• a)

  Raw materials, semi-finished products, containers, packaging, and other inputs that are necessary to produce the goods or services that are exported or when they are assembled, transformed, modified, or physically incorporated into products or services that are exported outside the national territory; the period for re-exportation of raw materials and other inputs imported under this regime shall be twelve months counted from the date of acceptance of the Merchandise Declaration.

• b)

  Machinery, equipment, molds, tools, spare parts, and accessories if used exclusively to assemble, transform, modify, or produce goods or services intended for export. Goods listed in this subsection may be sold after five (5) years from the date of their temporary import, prior authorization from the Executive Revenue Management Office (DEI) and payment of duties and taxes on imports in accordance with the laws in effect in the country; taking as a basis for valuation purposes the last resort method provided for in the Agreement on the Application of Article VII of the General Agreement on Tariffs and Trade 1994 GATT.

• c)

  Samples, instructions, patterns, and models necessary to adjust production to the standards and designs required in the international market and for demonstration, research, or instruction purposes. Motor vehicles cannot be part of this regime without the prior opinion of the Executive Revenue Management Office (DEI) that determines whether it is essential for the development of the productive activity.

When the goods and services referred to in Article 1 of this Decree were sold or transferred in any form for consumption in the national market without authorization from the Executive Revenue Directorate (DEI), it shall be classified as an infraction and sanctioned with the execution of the guarantee and the payment of a fine equivalent to one hundred percent (100%) of the tax debt. ... ...

To ensure compliance with the acts provided for in this Decree and its Regulations, the beneficiary must render and maintain in effect for each importation a bank guarantee in favor of the Executive Revenue Directorate (DEI), to respond for the amount of all suspended rights and taxes. These bank guarantees shall expire at the moment of:

• a)

  When merchandise admitted temporarily is re-exported in any state within the legally authorized period.

• b)

  When merchandise admitted temporarily is nationalized or re-exported.

• c)

  When voluntary abandonment occurs in favor of the State.

PRIOR AUTHORIZATION. Companies that have availed themselves of benefits in special tax regimes created by Law as an incentive to exports may not carry out activities intended for sale in the national market, except up to five percent (5%) of the exportable product provided that it does not meet the quality requirements demanded by the international market, and must request prior authorization from the Executive Revenue Directorate (DEI) for purposes of control, determination of value, and payment of corresponding rights and taxes. Entities that have availed themselves of special export incentive regimes may make donations to Public Sector entities in accordance with the regulation to be issued considering Decree Number 18-90.

REFORM. Reform Article 5, subsection 1) of the Tourism Incentives Law, Decree Number 314-98 dated April 23, 1999, modified through Article 18 of the Law of Financial Equilibrium and Social Protection, contained in Decree Number 194-2002 of June 5, 2002, reducing to seven (7) years the exemption from payment of Income Tax and in the case of incentives to the hotel industry to twelve (12) years.

NON-SIMULTANEITY. Companies that enjoy the benefits and rights granted by special regimes may not simultaneously avail themselves of two or more Export Promotion Laws or Suspensive Regimes, such as: Temporary Importation Regime, Tourism Incentives Law, Free Zones, Industrial Processing Zones for Exports, Agricultural Export Zones, Free Tourism Zone of the Department of Bay Islands, Customs Warehouses, Temporary Warehouses, and Duty-Free Stores.

DECLARATION OF FISCAL SACRIFICE. Natural or legal persons who enjoy exemptions or exemptions or who belong to a special regime must present the declaration of fiscal sacrifice, in the form, means, and periods that the Executive Revenue Directorate (DEI) approves for such purpose. CHAPTER VIII OTHER MEASURES

DECLARATION AND DEADLINE. The withholdings established by Law or those determined by the Executive Revenue Directorate (DEI) in the exercise of its legal powers must be settled in a sworn statement and paid to the Treasury in monthly form, no later than ten (10) calendar days of the month following when the withholding was made. This deadline is excepted for the Special Contribution on Financial Transactions for Public Security. The Executive Revenue Directorate (DEI) shall regulate the complementary provisions related to the regime of tax withholdings and perceptions.

EXTENSION OF DEADLINE. Extend the validity of Article 82 of Decree Number 17-2010 of March 28, 2010, which contains the LAW ON STRENGTHENING OF REVENUES, SOCIAL EQUITY AND RATIONALIZATION OF PUBLIC SPENDING, for thirty-six (36) months counted from the effective date of this Decree. TITLE IV SOCIAL PROGRAMS FUND CHAPTER I TRUST FOR THE SOCIAL PROGRAMS FUND

TRUST. The trust created by Decree Number 87-2011, dated June 9, 2011, which contains the reform by addition to Decree Number 264-2010 dated December 2, 2010, containing the General Budget of Income and Expenses of the Republic, Fiscal Year 2011, shall be maintained permanently with autonomy and own independence and the characteristics set forth in this Chapter.

PURPOSE. The trust referred to in the preceding Article shall serve to administer the Social Programs Fund.

EXEMPTION. There is exempted from customs duties or tariffs, import duties or special duties of charge or surcharge, Sales Tax, production, consumption, and purchases of goods and services that are made with charges to the Social Programs Fund.

TRANSFER FROM ENEE. The National Electric Energy Company (ENEE) is ordered, with prior knowledge of its Board of Directors, to execute the transfer of THIRTY-FIVE MILLION LEMPIRAS (L. 35,000,000.00) within twenty (20) calendar days from the establishment of the Trust of the "Social Programs Fund", contained within its budget, under the following budget items: "utilities and electrical materials" and "other spare parts and minor accessories", from the group "materials and supplies", toward the Trust created for the "Social Programs Fund" as an initial contribution, in order to create and execute in the short term the public lighting project in the highest-risk sectors of the population at the national level. Once the Trust is established, the National Electric Energy Company (ENEE) has forty-five (45) calendar days to present a public lighting project within the framework of the guidelines indicated by the Technical Committee of the Trust. The National Electric Energy Company (ENEE) is obligated to execute the public lighting project within the framework of the project approved by the Technical Committee of the Trust. Additionally to the amount mentioned in the first paragraph of this Article, the Trust of the "Social Programs Fund" shall allocate economic resources for the purchase of supplies for public lighting. TITLE V GENERAL PROVISIONS CHAPTER I OABI

OABI.- Reform Articles 20, 22, and 23 of Decree Number 45-2002 of March 2002 "Law on Money Laundering", which must read as follows:

The Office for the Administration of Seized Assets (OABI) is created as a dependency of the Executive Branch that shall be ascribed to a Department of State designated by the President of the Republic in Council of State Secretaries. The OABI shall be responsible for the safekeeping, custody, and administration of all assets, products, or instruments of crime that the competent authority places at its disposal. The OABI, following a resolution or ruling of the Judicial Body or the Public Ministry, as the case may be, shall proceed to return the assets, products, or instruments to persons who prove the circumstances referred to in Article 17 of the Money Laundering Law. For the safekeeping and administration of cash assets referred to in the preceding paragraph, the OABI shall make deposits in special accounts opened for such purpose in the Central Bank of Honduras or in any institution of the National Financial System, in accordance with the investment regulation previously approved by the President of the Republic, in which safety and profitability requirements shall be observed. In the case of movable assets, these shall be deposited in a general warehouse. When the seizure results from joint operations with other States, it shall be facilitated that the seized assets or the proceeds from their sale be divided in accordance with the participation of these, if reciprocity exists and to the extent that it extends.

Upon completion of the criminal process, when the judgment is final and orders a penalty of forfeiture, it shall proceed in accordance with what is provided in the preceding Article, or in its case with the sale of the assets in public auction, which shall be carried out fifteen days after its publication in a newspaper of national circulation. In this case, the proceeds from the sale and the seized money including bank deposits, securities, and other credits, as well as the fines, shall be distributed by the OABI in accordance with what is stated in the Reformed Article 78 of the Law on Permanent Deprivation of the Domain of Assets of Illicit Origin".

Add to Decree No. 45-2002 dated March 7, 2002, containing the "Money Laundering Law" Articles 20 A and 20 B which shall be read as follows:

Create as a consultative body the Inter-institutional Technical Committee, which is composed of the President of the Republic or their representative who shall preside over it, a representative of the Supreme Court of Justice, the Public Ministry, the State Secretariat for the Office of Finance, the State Secretariat for the Office of Security, and the State Secretariat for the Office of National Defense.

OABI must immediately inform the State Secretariat for the Office of Finance of all assets placed at its disposal, and said Secretariat is instructed to create the Provisional Register of Seized Assets dependent on the General Directorate of National Assets, for its registration and control.

A transition period of one hundred twenty (120) calendar days is declared, beginning from the effective date of this Law, to carry out all operations related to the transfer of OABI to the Executive Branch.

The personnel belonging to OABI shall be subject to the labor regime applicable to officials and members of the Executive Branch, preserving all acquired rights, unless the employee subject to this transfer wishes otherwise.

The Executive Branch shall issue the Regulations applicable to the organization, functioning, and powers of OABI within a term not to exceed thirty (30) calendar days from the publication of this Law. CHAPTER II PUBLIC-PRIVATE PARTNERSHIPS

NATIONAL REGISTRY OF PERSONS. The National Registry of Persons (RNP) is authorized to present an additional budget that permits the execution of a special program to facilitate the procedures for the preparation and issuance of the Identity Card to that sector of society that is highly vulnerable so that they may be beneficiaries of the social programs developed by the State. For this purpose, a Public-Private Partnership may be established. It must be presented to the National Congress of the Republic by the Commission for the Promotion of Public-Private Alliances (COALIANZA) within a term of sixty (60) calendar days for its approval.

NATIONAL ELECTRIC ENERGY ENTERPRISE. The establishment of one or more Public-Private Partnerships is authorized to execute public lighting projects under the responsibility of the National Electric Energy Enterprise (ENEE). This initiative must be presented to the National Congress of the Republic by the Commission for the Promotion of Public-Private Alliances (COALIANZA) within a term of forty-five (45) calendar days for its approval.

NATIONAL COMMISSION FOR SPORTS FACILITIES. The National Commission for Sports Facilities (CONAPID) is authorized to present an additional budget, which affects the Trust for the "Social Programs Fund," that permits the execution of a special program for the construction and remodeling of sports courts for demonstration and multiple uses, of natural or synthetic material, with electric lighting and perimeter protection at a minimum, to be implemented in rural and urban areas with low human development index, vulnerability regarding the citizen security phenomenon, climate change, and converting when possible risk zones into public spaces for the practice of sports. For this purpose, CONAPID is authorized to establish agreements with institutions of the National Financial System, municipal governments, and to establish, in accordance with the law, a Public-Private Partnership. This initiative must be presented to the National Congress of the Republic, jointly with the Commission for the Promotion of Public-Private Alliances (COALIANZA) within a term of Forty-Five (45) calendar days from the effective date of this Law.

INTER-INSTITUTIONAL COMMITTEE. Establish an Inter-institutional Committee composed of the State Secretariats for the Offices of Finance and Security, the Executive Directorate of Income (DEI), and the Institute of Property (IP), with the purpose of issuing recommendations for the establishment of a Public-Private Partnership, Associated Center, or in private form for its operation. The recommendations must include measures to establish security over license plates, vehicle registration, and control of the country's vehicle fleet. These shall be delivered to the Commission for the Promotion of Public-Private Alliances (COALIANZA) so that it presents an initiative to the National Congress within a term of Forty-Five (45) calendar days. CHAPTER III FINAL PROVISIONS

GUARANTEE OF TRUSTS. In the establishment of the trusts mentioned in this Law, the State of Honduras constitutes itself as a joint and several guarantor through the State Secretariat for the Office of Finance, in accordance with Article 78 of the Organic Budget Law.

The State Secretariat for the Offices of Industry and Commerce and the Consumer Protection Office are authorized to investigate the international standard on fuel heating called sixty degrees (60°) so that the Government implements it as a measure to increase government revenue and consequently sends the report to the National Congress.

The interest or dividends corresponding to loans or capital contributions related to social investment programs, between banking institutions, regulated financial institutions or organisms or international development banks, shall not be subject to the withholdings established in numerals 5) and 7) of Article 5 of the Income Tax Law.

REGULATIONS. The regulation of this Law must be elaborated jointly by the State Secretariat for the Office of Finance and the Executive Directorate of Income (DEI) within a period not to exceed thirty calendar days from the effective date of this Decree.

EFFECTIVE DATE. This Decree enters into effect on 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 twenty-fourth day of the month of June of Two Thousand Eleven. JUAN ORLANDO HERNANDEZ ALVARADO PRESIDENT RIGOBERTO CHANG CASTILLO SECRETARY JARIET WALDINA PAZ SECRETARY To the Executive Branch Therefore: Let it be executed. Tegucigalpa, M.D.C., July 5, 2011. PORFIRIO LOBO SOSA PRESIDENT OF THE REPUBLIC. WILLIAM CHONG WONG STATE SECRETARY FOR THE OFFICE OF FINANCE.