Decree 105-2011 Population Security Law

PURPOSE. The purpose of this Law is to establish mechanisms for strengthening public security organs and in particular to permanently improve peaceful coexistence and personal and material security of the inhabitants and persons within the national territory.

NATURE OF THE CONTRIBUTION. The contributions created in this Law are of a tax character for a period of five (5) years, as a response to the national emergency of population insecurity that requires having resources to combat delinquency and criminality in order to recover security in the population and attract greater investments to the country.

EXECUTION. The resources collected from contributions to strengthen the fight against delinquency and criminality shall be delivered to the Secretary of State in the Ministry of Finance through the General Treasury of the Republic, which in turn shall create a Trust whose administration shall be in simple form and whose managers from the State, business sector and Civil Society shall guarantee the proper use of such funds for the purposes of this Law in its transparent use so that the population shall know through quarterly evaluations in a transparent manner the administration of the funds. For Population Security and the results achieved in accordance with a plan prepared for such purpose. Ministry of Finance all types of acquisitions that are properly covered by the exemption provided in this Decree and, in turn, process and obtain the corresponding orders in the office of the Secretary of State in the Ministry of Finance, which must exercise at all times the necessary controls, verifications and supervisions, in order to guarantee the legal and appropriate benefit of the exemption that is granted by means of this Decree.

All imports that are in transit, or that may be confirmed or that have been provisionally cleared, shall enjoy the same benefits contemplated in the preceding Article, provided that the utilization is for the purposes indicated in Article 1 of this Decree.

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 Session Hall of the National Congress, on the twenty-third day of the month of June of Two Thousand Eleven. JUAN ORLANDO HERNANDEZ ALVARADO PRESIDENT RIGOBERTO CHANG CASTILLO SECRETARY GLADIS AURORA LOPEZ CALDERON SECRETARY To the Executive Branch. Therefore: Let it be executed. Tegucigalpa, M.D.C., June 23, 2011. PORFIRIO LOBO SOSA PRESIDENT OF THE REPUBLIC THE SECRETARY OF STATE IN THE MINISTRY OF FINANCE WILLIAM CHONG WONG TITLE II SPECIAL CONTRIBUTIONS FOR POPULATION SECURITY CHAPTER I SPECIAL CONTRIBUTION FOR FINANCIAL TRANSACTIONS PRO-POPULATION SECURITY

CREATION AND EFFECTIVENESS. A Special Contribution for Financial Transactions Pro-population security is created, with a transitory character that shall be applied for five (5) years from the entry into force of this Law.

SUBJECT MATTER. This Special Contribution taxes operations carried out in National and Foreign Currency, in institutions of the national banking system, cooperatives that carry out savings and lending operations, the National Bank of Agricultural Development (BANADESA), Financial Companies, Representative Offices and Private Financial Development Organizations (OPDF), supervised by the National Commission of Banks and Insurance (CNBS), hereinafter identified as FINANCIAL ENTITIES, according to the following detail:

• a)

  Debits (withdrawals) in sight deposits and savings deposits made in Financial Entities;

• b)

  Payments or transfers of funds through a Financial Entity, not carried out through the account indicated in the preceding subsection a), whatever the denomination given to these operations, the mechanisms used to carry them out, including through cash movements, and the legal instrumentation, regardless of the denomination of the accounts of the financial entities themselves, transactions carried out against them within those covered by this rule;

• c)

  Acquisition in financial entities, without using the accounts indicated in the preceding subsection a), certified checks, traveler's checks, electronic transfers or other similar financial instruments existing or to be created;

• d)

  Payments or transfers in favor of third parties on account of principals or clients charged to money held or collected in their name, made by financial entities, without using the accounts indicated in the preceding subsection a), whatever the denomination given to these operations, the mechanisms used to carry them out, including through cash movements, and the legal instrumentation, whether in individual, joint or solidary form, those that make payments or transfers of funds; those that request cashier's checks, certified checks, traveler's checks, electronic transfers or other similar financial instruments existing or to be created, those that order payments or transfers in favor of third parties, those that grant payments or transfers in favor of third parties collected with this rule;

EXEMPTIONS. The following are exempt from this Contribution:

• 1)

  The accounts in financial entities, corresponding to the Central Bank of Honduras and the Public Sector, except Public Enterprises, Autonomous and Decentralized Entities;

• 2)

  The trust accounts created by the Central Bank of Honduras and the Public Sector, except Public Enterprises, Autonomous and Decentralized Entities;

• 3)

  The lending operations of the National Bank of Agricultural Development (BANADESA), to the creditor whose modality has an amount of Seven Hundred Thousand Lempiras (L. 600,000.00);

• 4)

  On condition of reciprocity duly accredited by the Secretary of State in the Ministry of Foreign Affairs, the debits (withdrawals) from accounts in financial entities, corresponding to diplomatic missions, consular offices, international organizations and foreign diplomatic personnel accredited to the State of Honduras;

• 5)

  The debits (withdrawals) from accounts opened in financial entities by Cooperation Agencies and associated entities dependent on Foreign Governments that are exempt by virtue of international agreements accredited by the Secretary of State in the Ministry of Foreign Affairs;

• 6)

  The debits (withdrawals) in savings deposits in national currency of natural persons with an average balance of the immediately preceding month, less than or equal to one hundred twenty thousand lempiras (L. 120,000.00);

• 7)

  The debits (withdrawals) in savings deposits in foreign currency of natural persons with an average balance of the immediately preceding month of a month less than or equal to six thousand dollars of the United States of America ($.6,000.00) monthly;

• 8)

  Direct transfers from the client's accounts designated for their credit in fiscal collection accounts for national or municipal taxes and collection accounts for legal contributions to social security;

RATE. The rate of the Special Contribution for Financial Transactions Pro-population security is zero point three percent (0.3%).

DECLARATION, LIQUIDATION AND PAYMENT. Financial entities must act as Withholding or Collection Agents of this Special Contribution in each taxable operation. The declaration, liquidation and payment thereof shall be made in the form and conditions established by the Executive Direction of Income (DEI). The amounts withheld or collected shall be credited to the Treasury in accordance with the following detail: 1) That withheld or collected between the 1st and 15th day of each month must be credited no later than the 20th day of the same month, and, 2) That withheld or collected between the 16th and the last day of each month, must be credited no later than the 6th day of the following month. The Secretary of State in the Ministry of Finance must transfer a monthly report of income from this item to the Legislative Branch.

ADAPTATION OF SYSTEMS. A period of sixty (60) business days is granted from the entry into force of this Law, to financial entities to adapt their computer systems for the collection of this Special Contribution. CHAPTER II SPECIAL CONTRIBUTION FOR MOBILE TELEPHONY

SUBJECT MATTER. A Special Contribution is created with a transitory character of Mobile Telephony Pro-population security that taxes the activities and services provided by mobile telephony operators. The National Commission of Telecommunications (CONATEL) shall oversee that these costs are not passed on to the user.

TAXABLE BASE. The taxable base is the total of monthly gross income of companies engaged in mobile telephony services.

PASSIVE SUBJECTS. The passive subjects are the legal persons that develop the activities and services of commercialization of food and beverages in the country and are not regulated by the Law of March 7 on Telecommunications.

RATE. The rate is one percent (1%).

DECLARATION, LIQUIDATION AND PAYMENT. The declaration, liquidation and payment of the Special Contribution for Mobile Telephony Pro-Population Security has a monthly periodicity and must be submitted and paid within the first ten days of the month following the generation of income, in accordance with the form and conditions established in the regulations issued by the Executive Revenue Directorate (DEI). CHAPTER III SPECIAL CONTRIBUTION FOR ENVIRONMENTAL PROTECTION

OBJECT. A Special Contribution for Environmental Protection is created for the exploitation and commercialization of minerals in the country carried out by natural and legal persons.

TAXABLE BASE. The taxable base is the FOB (Free On Board) value of the export registered in the Declaration of Merchandise.

TAXABLE SUBJECTS. The taxable subjects of the Special Contribution for Environmental Protection are natural and legal persons who carry out mineral exploitation and/or commercialization activities.

RATE. The rate is five percent (5%).

DECLARATION, LIQUIDATION AND PAYMENT. The declaration, liquidation and payment of the Special Contribution for Environmental Protection shall be carried out jointly with the liquidation operations of the Declaration of Merchandise. CHAPTER IV SPECIAL CONTRIBUTION OF THE FOOD AND BEVERAGE SECTOR

OBJECT. The Special Contribution of a transitory character Pro-Population Security is created for the commercial food and beverage sector under international franchises that are under any special regime.

TAXABLE BASE. The taxable base is the total gross monthly income earned by commercial companies engaged in the commercialization of food and beverages that operate in the country under international franchises that are under any special regime.

TAXABLE SUBJECTS. Taxable subjects are legal persons who develop the activities and services of food and beverage commercialization in the country under international franchises and that operate under any special regime.

RATES. The rate is zero point five percent (0.5%).

DECLARATION, LIQUIDATION AND PAYMENT. The declaration, liquidation and payment of the Special Contribution for food and beverages under international franchises that are under any special regime has a monthly periodicity and must be submitted and paid within the first ten days of the month following the generation of income, in accordance with the form and conditions established in the regulations issued by the Executive Revenue Directorate (DEI). TITLE III SUPPORT MEASURES FOR POPULATION SECURITY CHAPTER I NUMERIC PORTABILITY

CREATION. The National Telecommunications Commission (CONATEL) must issue the necessary administrative regulations that require mobile telephony operators to implement numeric portability of mobile telephony in the country, which must be in operation within the following one hundred twenty (120) days calculated from the approval of this Law. CONATEL must, within the term of thirty (30) business days from the effective date of this Law, issue the regulations to govern numeric portability. Mobile telephony operators shall be authorized to deduct from the contribution referred to in Chapter II, Title II of this Law the costs associated with the implementation of numeric portability, and must remit the remainder in the form and by the means established by the Executive Revenue Directorate (DEI). CHAPTER II REGULARIZATION OF FIREARM REGISTRATION AND CARRYING

REGULARIZATION. Without prejudice to what is established in the Law for the Control of Firearms, Ammunition and Similar Items created by Decree No. 30-2000, reformed by Decree No. 257-2002, and Decree No. 187-2004; the State Secretary in the Office of Security must establish the necessary administrative procedures so that the citizen may register exceptionally and only once within the following six (6) months of said norms, according to which the registration of firearms shall be regularized. TITLE IV TRUST FOR THE ADMINISTRATION OF THE POPULATION PROTECTION AND SECURITY FUND CHAPTER I

CREATION. The Population Protection and Security Fund is created, which shall operate through a financial trust with special contributions from Title II of this Law, donations and contributions in any form of the yields obtained from investments.

CONSTITUTION AND OPERATION. The Executive Branch is authorized, through the State Secretary in the Office of Finance, to execute through the procedures of private bidding or auction, the necessary contracts for the constitution and operation of the trust. The constitution of the trust shall be authorized on plain paper and without formalities, or through the requirements established in the Commercial Code, which shall be registered in the Public Commercial Registry of Francisco Morazan, registration which shall not cause any fee, rate or registration right for its registration. The fiduciary institution shall be remunerated from the yields produced by the investments made through the fees collected. It is prohibited to establish clauses or conditions by which the yields of the contributions are committed to finance the administration and management of the fund.

ALLOCATION. The resources of the Population Protection and Security Fund shall serve to finance the actions of prevention and control of common or organized crime in any of its forms or denominations. The funds of the Trust, must be allocated to the activities that the Judicial Branch, Public Ministry, the State Secretariat in the Secretariat of State in the Office of Security, State Secretariat in the Office of Defense, Fire Department of Honduras and other institutions, hereinafter referred to as Trustee Institutions, develop for the prevention and control of delinquency and crime. The purchases and acquisitions made with charges to the Fund must be carried out in support of the Purchase and Acquisitions Plan approved by the Technical Committee. This plan of purchases and acquisitions must establish prevention and control actions duly itemized in order to define its lines of action, among which must be contracted actions of security, social services, public lighting and others related to the objective of the Fund. The Trust with the technical advice of CONATEL, must arrange with authorized mobile telephone operators authorized to operate in the country, programs, technological equipment, installation and administration of electronic devices with input and output of calls from and to the penitentiary centers of the country, operations that must be supervised by CONATEL. The trusts must present to the Trust the indicators and goals to be met.

TECHNICAL COMMITTEE. The Trust shall have a Technical Committee that shall be composed of a principal member or their respective alternate, in the following form:

• 1)

  Director of the Technical Committee, with right of veto, appointed by the President of the Republic;

• 2)

  Director of the Technical Committee, with right of veto, appointed by the Honduran Council of Private Enterprise (COHEP); and,

• 3)

  Director of the Technical Committee, appointed by the National Convergence Forum (FONAC). Those appointed shall serve in their positions for twenty-four (24) months. In case of impediment or temporary absence of a Principal Director, they shall be replaced by their respective alternate. The Alternate Secretaries who accompany the Principal shall be appointed on a temporary or permanent basis, depending on the nature of the vacancy that occurs. Under this Technical Committee, an Administration and Acquisitions Committee shall operate that shall be composed of the three directors of the aforementioned Technical Committee with the majority of specialists in security policies, crime control and prevention. This Administration and Acquisitions Committee shall submit a quarterly report to the Technical Committee, as well as to the general public, on how the trust funds are invested. Without prejudice to the controls that the Court of Accounts shall exercise over said funds, it shall be mandatory to conduct an external audit of the administered funds at the conclusion of each fiscal year.

TRANSFERS. The President of the Republic shall determine for each fiscal year the amount from which transfers of resources from special contributions must be made from the Population Protection and Security Fund to the Trust created for the purpose of Social Enterprises authorized by Legislative Decree No. 87-2011. The Population Protection and Security Fund shall never be less than One Thousand Five Hundred Million Lempiras (L.1,500,000,000.00).

EXEMPTION. There is hereby exempted from rates, contributions, taxes or customs duties on importation or special taxes or surcharges on taxes on production, consumption and/or business of goods and services that are made with charges to the Population Protection and Security Fund.

SUSPENSION. The collection of security rates or their equivalents levied by municipalities is temporarily suspended for so long as this Law remains in force.

COMPENSATION OF MUNICIPAL TRUSTS. In cases where there are already internationally recognized successful experiences in citizen security issues in phases or programs implemented in a municipality, and that meet the requirements stipulated in this provision, the Trust shall be authorized to effect transfers of resources from the Population Protection and Security Fund to said municipalities, transfers that must initially be made proportionally, the amounts that the municipality should receive for the temporary suspension of the municipal security rate, taking as reference the immediately preceding fiscal year for which this concept was collected. For other municipalities to be eligible for this benefit they must comply with the following requirements:

• 1)

  That the decision to implement a security plan, supported by citizens, be made in an open town meeting;

• 2)

  That the Municipal Security Plan be certified by the State Secretariat in the Office of Security; and 3) That they constitute a trust for the administration of resources allocated to the municipal security plan.

COLLECTION, SUPERVISION AND ENFORCEMENT. The collection, supervision and enforcement of the Special Contributions of Title II of this Law shall be the responsibility of the Executive Directorate of Revenue (DEI). The National Commission of Banking and Insurance (CNBS) must ensure that the Special Contribution for Financial Transactions for Population Security is not transferred to account holders and that these operations remain duly itemized in the accounting records of Financial Entities. Non-compliance with the obligations set forth in Title II of this Law shall be sanctioned by application of the provisions of the Tax Code.

INFORMATION. Financial Entities are obligated to report in detail the collections and amounts made in the ways, forms and terms that the Executive Directorate of Revenue (DEI) determines through regulation.

NON-DEDUCTIBILITY. The Special Contributions of Title II of this Law are not deductible for purposes of Income Tax or other taxes.

PERMANENT CHARACTER. The provisions of this Law that refer to number portability have a permanent character.

ALLOCATION OF THE PRODUCT OF THE CONTRIBUTION. The result as established in the current legal norms regarding the deposit of revenues in the Single Account of the General Treasury of the Republic, said resources shall be transferred, with their special income codes, to the Financial Administration (SIAFI) for the formation of the Population Protection and Security Fund. The General Treasury of the Republic shall immediately credit the funds obtained to the account of the Trust created for this purpose.

The recommendation that proceeds from the Special Contribution for Financial Transactions for Population Security shall be registered as other taxes administered by the Executive Directorate of Revenue (DEI), and their collection through the National Financial System does not cause the payment of collection commissions to such institutions that act as withholding or collection agents; the omission thereof shall make the Financial Institution liable for the administrative sanctions imposed by the Executive Directorate of Revenue (DEI) or the National Commission of Banks and Insurance (CNBS) without prejudice to the legal actions that correspond. For accounting purposes, the other special contributions are considered as other taxes administered by the Executive Directorate of Revenue (DEI).

Commercial Corporations that engage in the business of casinos and slot machines shall have applied to their monthly income (15) over the monthly income of contributions shall be applied the same rules established for the contributions.

(REGULATION). The regulation of this Law must be elaborated jointly by the State Secretariat in the Office of Finance and the Executive Directorate of Revenue (DEI) within a period not exceeding thirty calendar days from the entry into force of this Decree.

EFFECTIVE DATE. This Decree shall enter into force on the day of its publication in the Official Gazette La Gaceta. Done in the city of Tegucigalpa, Municipality of the Central District, in the Hall of Sessions of the National Congress, on the twenty-third day of the month of June of the year two thousand eleven. JUAN ORLANDO HERNANDEZ ALVARADO PRESIDENT RIGOBERTO CHANG CASTILLO SECRETARY JARIET WALDINA PAZ SECRETARY To the Executive Branch For Implementation: Let it be executed. Tegucigalpa, M.D.C., July 5, 2011. PORFIRIO LOBO SOSA PRESIDENT OF THE REPUBLIC MARLON PASCUA CERRATO STATE SECRETARY IN THE OFFICE OF NATIONAL DEFENSE OSCAR ARTURO ALVAREZ GUERRERO STATE SECRETARY IN THE OFFICE OF SECURITY