Regulation of the Fiscal Responsibility Law

Object.- The purpose of this Regulation is to develop the provisions contained in Decree No. 25-2016 containing the Fiscal Responsibility Law, approved on April 7, 2016 and published in the Official Gazette "La Gaceta" dated May 4, 2016.

Scope of Application.- The provisions contained in this Regulation shall apply to the Non-Financial Public Sector (SPNF) in all those acts, facts and situations regulated in Decree No. 25-2016.

Definitions.- For the purposes of this Regulation, the following definitions shall be applied: CENTRAL ADMINISTRATION: For purposes of consolidating fiscal statistics, it comprises the Branches of State and other Constitutional Bodies. PAYMENT ARREARS: In accordance with what is established in the Organic Budget Law and its amendments. GLOBAL BALANCE OF THE NON-FINANCIAL PUBLIC SECTOR (SPNF): It equals total revenues collected minus total accrued expenses. A positive result means a surplus and a negative result means a deficit in the global balance of the SPNF. PRIMARY BALANCE OF THE SPNF: It is the global balance of the SPNF, excluding payments of interest on debt (internal and external) of the SPNF and financial income derived from the holding of financial assets remunerated by entities of the General Government. INTER-INSTITUTIONAL COMMITTEE: Committee created pursuant to Article 6 of the Fiscal Responsibility Law and composed of the Secretary of General Government Coordination (SCGG), the Central Bank of Honduras (BCH) and the Secretary of State in the Ministry of Finance (SEFIN), who shall preside over it. ECONOMIC GROWTH: Increase in the production of goods and services in the economy, per unit of time. The basic measures of growth are the change in Gross Domestic Product (GDP), National Income or in Gross National Product in real terms; that is, in currency of equal value after adjustments for inflation. The concept of economic growth refers only to the increase in the production of goods and services and does not include, therefore, any assessment regarding other economic objectives of political authorities or groups of opinion, such as income distribution, improvement in the living conditions of the population, among others. PUBLIC DEBT: In accordance with what is established in the Organic Budget Law and its amendments. FLOATING DEBT: In accordance with what is established in the Organic Budget Law and its amendments. PUBLIC DEBT OF THE SPNF: It is the sum of external and internal debt of all public entities of the SPNF. NON-FINANCIAL PUBLIC ENTERPRISES: These are legal entities that engage in the production of non-financial goods and services for the market that are controlled by entities of the public sector. TAX EXEMPTIONS: These are all those provisions approved by the National Congress and expressed in tax regulations with the rank of Law that create taxes, which exempt totally or partially from the payment of the tax obligation. TAX EXONERATIONS: It is the total or partial dispensation of the payment of the tax obligation approved by the National Congress, whose individual processing corresponds to the Executive Branch, through the Secretary of State in the Ministry of Finance. TRUST AGREEMENT: A legal transaction by virtue of which a bank authorized to operate as a trustee is assigned the ownership of certain assets, with the limitation, of an obligatory nature, to perform only those acts required to comply with the lawful and specific purpose to which they are destined. CURRENT EXPENDITURES OF THE SPNF: These are accrued expenditures intended for ordinary consumption and operation of the SPNF. They include compensation, purchase of goods and services, commissions, current transfers and payment of interest on public debt. CAPITAL EXPENDITURES OF THE SPNF: These are accrued expenditures intended directly or indirectly for the formation of gross capital and the purchase of real property, intangible assets and other non-financial assets. ACCRUED EXPENDITURES: Expenditure is considered accrued upon receipt in accordance with the goods and services requested or upon completion of the administrative requirements established by current regulations, implying the definitive impact on the budgetary allocation and the arising of a payment obligation immediately or later offered. TOTAL EXPENDITURES OF THE SPNF: It is the sum of all expenditures, both current and capital by the SPNF, excluding the amortization of public debt. TAX EXPENDITURES: Income that the State of Honduras ceases to perceive by granting a concession or expansion of incentives or fiscal benefits, understanding as such the exceptions, exonerations, reduced rates and deductions that have the purpose of benefiting, promoting or fostering certain activities, sectors, branches, regions, or groups of taxpayers. CENTRAL GOVERNMENT: For purposes of consolidating fiscal statistics, it comprises the Central Administration, Decentralized Public Institutions and Social Security Institutions. GENERAL GOVERNMENT: For purposes of consolidating fiscal statistics, it comprises the Central Government plus the Municipalities. CONSUMER PRICE INDEX (CPI): It is a number that summarizes the variations in the prices of a basket of goods and services, which is representative of a family's consumption. INFLATION: It is the sustained increase in the general price level. It can also be defined as the sustained loss of value of money as a consequence of rising prices. MONTHLY INFLATION: Percentage variation of the CPI of the current month with respect to the previous month. ACCUMULATED INFLATION: It is the percentage that shows the variation of the national index of final consumer prices each month, in relation to December of the previous year. YEAR-OVER-YEAR INFLATION: It is the percentage variation of the CPI between a given month of the current year and the same month of the previous year. AVERAGE INFLATION: It is the percentage variation between the average of the CPI obtained in a given period of the year, with respect to the average of the CPI of the same period of the previous year. TAX REVENUES: These are the revenues that the State perceives as payment of taxes by natural and legal persons, in accordance with the applicable current legal framework. LAW: Fiscal Responsibility Law (LRF) approved by Decree No. 25-2016 dated April 7, 2016. MEDIUM-TERM MACRO FISCAL FRAMEWORK (MMFMP): It is a dynamic management tool that guides strategic fiscal policy decision-making. It shall include multi-year fiscal projections of revenues, expenditures and financing, expressing global indicative ceilings for said variables; this tool shall be kept updated annually, with a fiscal projection of four years. NON-FINANCIAL PUBLIC SECTOR (SPNF): For purposes of consolidating fiscal statistics, it is composed of the General Government plus Non-Financial Public Enterprises. TAX BURDEN OR PRESSURE: Percentage relationship between the amount of tax revenues and the Gross Domestic Product in nominal terms of a given fiscal year. This indicator provides a quantitative idea of what the State collects through taxes, in relation to what it produces internally. GROSS DOMESTIC PRODUCT (GDP): It is the production created in an economic period, valued at the cost of factors of production or at market prices. It aims to quantify the result of the economic activity of a given country, which is reflected in the value added generated by the different productive activities within the national territory. GDP at cost of factors is synonymous with the country's production at producer prices. If indirect taxes net of subsidies are added to the aforementioned concept, GDP at market prices is obtained, that is, production at buyer prices. QUARTERLY GROSS DOMESTIC PRODUCT: Quantifies the result of the economic activity of a given country, reflected in the value added generated by the different economic activities within the national territory, for each quarter. ECONOMIC RECESSION: It is the significant decrease in economic activity that affects the entire economy during a sufficiently prolonged period. For purposes of this Regulation, a recession shall be considered when the growth of real GDP (BCH data) is negative for at least two consecutive quarters. TAXES: These are the pecuniary payments that the State demands in exercise of its tax authority and as a consequence of the realization of the taxable event provided by law, to which it links the duty to contribute, with the objective of satisfying public needs. Taxes are classified into Income Taxes, Fees, Contributions and Flat Tax or Single Tax. CHAPTER II FISCAL RESPONSIBILITY RULES.

Multi-Year Rules for Fiscal Performance 1. Macrofiscal Rules for the SPNF.

• a)

  The annual deficit of the global balance of the SPNF shall not exceed one percent (1%) of the Gross Domestic Product (GDP) from 2019 onwards, which shall be applied gradually as follows: - It may not be greater than one point six percent (1.6%) in the year 2016; - It may not be greater than one point five percent (1.5%) in the year 2017; - It may not be greater than one point two percent (1.2%) in the year 2018; and, - It may not be greater than one percent (1%) for the year 2019 onwards. The global balance of the Non-Financial Public Sector in the analysis period (t), is defined as: Global balance_t = Tax revenues_t + Non-tax revenues_t + Capital revenues_t + Donations_t - Total expenditures_t Where: Total expenditures_t = Current expenditure_t + Capital expenditure_t Where in turn: Current expenditures_t = Salaries and Wages_t + Goods and services_t + Interest on internal and external debt_t + Current transfers_t Capital expenditures_t = Investment_t in gross capital formation + Capital transfers_t The application of the rule defined for the deficit shall be made gradually and in the following manner: 2016 2017 2018 2019 Successive periods DBGSPNF_t DBGSPNF_t DBGSPNF_t DBGSPNF_t DBGSPNF_t ≤ 0.016 * PIB_t ≤ 0.015 * PIB_t ≤ 0.012 * PIB_t ≤ 0.01 * PIB_t ≤ 0.01 * PIB_t Where: PIB: Gross Domestic Product at current or nominal prices. DBGSPNF: Deficit of the global balance of the Non-Financial Public Sector For the determination of compliance with this rule, the nominal GDP published in the MMFMP with information provided by the BCH shall be used. In the case of information for the preparation of the financial account of SPNF institutions, this may be taken from budgetary execution or financial statements.

• b)

  Nominal current expenditure of the Central Administration The annual increase in nominal current expenditure of the Central Administration shall not exceed: i. The annual average of the last ten (10) years of real GDP growth. ii. Plus the projection of average inflation for the following year. That is: Δ%Current expenditure Central administration_t ≤ Σ^10_i=0 100 · (GDPRt-i / GDPRt-i-1 - 1) / 10 + Average inflation_t+1 Taking into account that: Average inflation_t+1 = 100 · (Σ^12_j=1 CPI_j,t+1 / Σ^12_j=1 CPI_j,t - 1) Where: GDPR: Gross Domestic Product Real or at constant prices CPI: Consumer Price Index Average inflation: Average projected inflation for the following year t: Years j: Months from January to December of each year Σ: Summation notation Δ%: Annual percentage variation CPI: Projection of average CPI For the determination of compliance with this rule, the average inflation projection provided by the BCH and contained in the MMFMP shall be used. For the determination of average GDP growth in real terms over the last 10 years, only values provided by the BCH shall be used.

• c)

  Floating Debt The new floating debt of the Central Administration at the close of the fiscal year, from the approval of the Law, may in no case exceed zero point five percent (0.5%) of GDP in nominal terms. That is, Dflot_t ≤ 0.005 * PIB_t Where: PIB: Gross Domestic Product Dflot: Floating Debt 2. Rules on tax exonerations. In order to maintain the financial balance of the General Budget of Income and Expenditure of the Republic, when a Bill Draft is presented that seeks to organize a concession or expansion of fiscal incentives or benefits that would result in a tax expenditure, the Reporting Commission of the National Congress shall request from SEFIN a Technical Opinion on the budgetary and financial impact, for the time it is in effect and SEFIN shall send it to the National Congress within a maximum period of thirty (30) business days counted from the date of receipt of said request. SEFIN shall request from the institutions involved in the presentation of the bill draft the necessary information to issue the technical opinion, which shall be prepared by the General Directorate of Tax Policy (DGPT) in consultation with the General Directorate of Customs Franchise Control (DGcFA). The technical opinion must contain the following:

  • 1)

    The estimation of the budgetary and financial impact, during the time the concession or expansion of fiscal incentives or benefits is in effect;

  • 2)

    Consistency of the budgetary and financial impact of the legislative proposal with the MMFMP determined by the General Directorate of Macrofiscal Policy (DPMF) in accordance with what is established in Article 22 of the Law;

  • 3)

    Compensatory measures to offset the possible effect on medium-term fiscal targets; and, 4. Other elements of an economic-social nature that should be considered in the approval of the Bill.

Exception Rules.- The application of the Law and this Regulation shall not apply to the exception rules referenced in Article 4 of the Law. For purposes of subsection 1) of said Article, national emergency declaration shall be understood as one declared for a natural disaster that could seriously affect the national economy, to the extraordinary situation with damage equal to or greater than the equivalent of one percent (1.0%) of annual GDP. The BCH shall be responsible for measuring the impact on GDP resulting from damage caused by the natural disaster, using for this purpose information available collected from different public and private sources according to the affected areas, as well as from own research conducted by the BCH. The results shall be provided promptly to the Inter-Institutional Committee, which shall forward them to the highest government authorities so that it is sent to the National Congress of the Republic. For purposes of subsection 2) of the previously cited Article, periods of recession may be enumerated within a single year or spanning two years; provided they are consecutive and evaluated with the latest available figures of quarterly GDP published by the BCH according to the Anticipated Information Dissemination Calendar of Economic and Financial Information available on the BCH website.

Medium-Term Macro Fiscal Framework.- The MMFMP must include multi-year fiscal projections of revenues, expenditures and financing, expressing global indicative ceilings for said variables; except for the year in which the budget is prepared, in which case said ceilings shall be binding. Furthermore, it must be updated annually, with a fiscal projection of four (4) years, which includes the preliminary result of the previous year; all these values (result and projections) based on information available as of January 31 of each year and must comprise, at a minimum:

• a)

  The declaration of principles of fiscal policy, in which the guidelines of economic policy and the objectives of medium-term fiscal policy must be presented, including the policy measures and the estimated results of the Central Administration, Municipalities, Public Enterprises and the SPNF. This declaration shall be prepared by SEFIN through the DPMF.

• b)

  Financing estimates for the SPNF and its components during the period of validity of the Framework, detailed by the DPMF based on information available as of January 31 of each year.

• c)

  The forecasts for the next four (4) consecutive or subsequent years, prepared by the DPMF based on available information, corresponding to: i. The main macroeconomic variables, among which the following must be included mandatorily: nominal GDP, real GDP growth, average and end-of-period inflation, exports and imports of goods, provided by the BCH, which shall prepare them based on basic information available as of January 31 of each year, provided by public and private entities, in accordance with economic and financial evolution at national and global level as a whole; given the existing lags for the measurement of indicators and obtaining basic data. Regarding inflation, it refers to the average projection of 12 months and that accumulated to December of each year. ii. Projections of revenues and fiscal expenditures of the SPNF, prepared by the DPMF with information provided by the Tax Administration, the General Directorate of Budget (DGP), the General Directorate of Public Investment (DGIP) and the General Directorate of Public Credit (DGCP). The expenditure report shall be prepared according to the economic classification thereof. iii. The medium-term public investment plan at global level, with its respective amounts, destination and sources of financing, prepared by the DGIP. iv. A report of the quantification of the annual flow of tax expenditure for the four (4) years under analysis and its projection of revenues from expiration, prepared by the General Directorate of Tax Policy in consultation with the General Directorate of Customs Franchise Control. v. The level of public indebtedness derived from the budget in the medium term, considering, including any guarantee from SPNF entities and a projection of the payment profile of short and long-term debt, prepared by the DGCP; vi. Indicators that evaluate the sustainability of public debt in the medium and long term, prepared jointly by the DPMF and the DGCP. vii. Evaluation of compliance with the targets of the previous year, prepared by the DPMF; and, viii. Annex of Fiscal Risks: evaluation of contingent liabilities and other risks for the year and their respective mitigation plans. The Annex of Fiscal Risks shall be prepared by the Fiscal Contingencies Unit (UCF) of SEFIN and in accordance with what is established in Article 25 of the Fiscal Responsibility Law, shall develop in a progressive manner the identification and assessment of fiscal risks generated in the administration of the State, and must publish in the third year of the Law's validity the respective report, including mitigation plans for the following sources of fiscal risk: 1. Risk of guarantees granted by the State in support of public credit operations contracted by public sector entities 2. Risks related to Public-Private Partnership (APP) contracts 3. Risks from lawsuits brought against the State 4. Risks from indebtedness of Municipalities 5. Risks from natural disasters 6. Risks of public enterprises. Notwithstanding the aforementioned identification, over time other risks could be considered for assessment that could require additional financial resources from the State of Honduras. The UCF shall prepare and implement, gradually and in a dynamic process that will be improved over time, a Procedures Manual as a guide for institutional performance, in which the process involving the identification and assessment of fiscal risks as part of its functions and risk management shall be detailed, including in accordance with parameters or indicators. To achieve these objectives, there must be the accompaniment and unrestricted support of the Commission for the Promotion of Public-Private Partnership (COALLIANZA), the Public-Private Partnership Superintendence (SAPP), the Office of the Solicitor General of the Republic (CGR), the involved Secretaries of State, Municipalities, the National Commission of Banks and Insurance (CNBS), the BCH, Public Enterprises, Permanent Committee of Contingencies (COPECO), the Supreme Court of Accounts, Social Security Institutes and any other institution that warrants its participation to achieve the objective.

The Inter-Institutional Committee is composed of SEFIN, SCGG and the BCH. Said Committee shall be in charge of the preparation and execution of the MMFMP and is coordinated by SEFIN, and shall be presided over by the Minister of Finance, who may delegate to the immediately inferior authority. The Committee may call upon other participants if necessary.

Approval and Publication of the Medium-Term Macro Fiscal Framework.- In order to achieve compliance with the dates set forth in Article 7 of the Fiscal Responsibility Law, the three institutions that make up the Inter-Institutional Committee must work together to make the projections, observations and corresponding adjustments in the process of preparing the MMFMP based on information available as of January 31 of each year, with the support of consensus among the parties, which will facilitate approval. For purposes of what is provided in Article 7 of the Law, the results of the macroeconomic indicators at the close of the previous year that the BCH must send to SEFIN shall be calculated with basic information available as of January 31 of each year, provided by public and private entities, given the existing lags for obtaining information; with the exception that they shall be sent in preliminary form, and may be different from those subsequently presented within the framework of the Monetary Program, whose publication date is within the first three (3) months of the calendar year on the BCH website. A technical opinion issued by the BCH shall be understood as the Letter signed by the President of the BCH or the person to whom the BCH has delegated, stating that the MMFMP is congruent with the forecasts of Balance of Payments, Net International Reserves and Monetary Policy, as well as with the economic situation prevailing at that moment.

The President of the Republic, in Cabinet Session, must approve the MMFMP no later than the last business day of April of each year. This Framework shall be published in its entirety together with the BCH Report, understanding that this is the technical opinion to which reference will be made in Article 7 of the Fiscal Responsibility Law.

The President of the Republic in Cabinet Session may, at the request of SEFIN, modify the MMFMP. For said modification the following is required: i. Technical opinion from the BCH, which shall be in the same terms established in Article 7 of the Fiscal Responsibility Law, in which the reasons must be stated that justify or do not justify changes to the MMFMP approved in April, due to positive or adverse internal or external situations that affect the forecasts of the macroeconomic framework. ii. Issuance of a supplementary document issued by the Inter-Institutional Committee where the modifications to the MMFMP approved in April are justified. However, in the revision, the Executive Branch may not increase the limits on the deficit or non-financial expenditures referred to in Article 3 of the Fiscal Responsibility Law, except in the cases provided for in Article 4 of said regulation. On the other hand, modifications to the MMFMP must be approved and published following the procedure established in the preceding Article.

Corrective Measures.- The DPMF prepares the projections of the quarterly distribution of revenues and corresponding expenditures of the public entities within the scope of the Fiscal Responsibility Law, with the support of the Tax Administration, the DGP, the DGIP, the DGCP and the General Directorate of Decentralized Instructions (DGID) and any other Directorate or Unit that may be necessary, with information available at that date. At the end of each quarter, after 45 days, the Inter-Institutional Committee shall review the result of budgetary execution in relation to the projection of the quarter. The results shall be sent to the Economic Cabinet, which, in case there are significant deviations between what was projected and what was executed, shall decide on the corrective measures to apply for compliance with the fiscal rules contained in the Fiscal Responsibility Law.

Declaration on Compliance with Fiscal Responsibility.- For the declaration of compliance with fiscal responsibility, the following process must be followed: i. SEFIN must send the declaration on compliance with the Fiscal Responsibility Law of the previous fiscal year to the National Congress of the Republic before June 30 of each year. ii. SEFIN shall publish this declaration in electronic media. iii. In said declaration, the following must be evaluated: revenues, expenditures, fiscal result, financing and other macroeconomic targets established in the MMFMP of the corresponding year. iv. If there are significant deviations between what was approved in the MMFMP and the results of the fiscal year, the differences and the corrective measures applied must be explained. The declaration of compliance with fiscal responsibility shall be prepared by the Inter-Institutional Committee. Within SEFIN, it shall be coordinated by the DPMF with information provided by the Tax Administration, the DGP, the DGIP, the DGCP, the DGID and any other Directorate or Unit that may be necessary, with information available as of January 31 of each year.

SEFIN must publish a report on the degree of progress with respect to the targets set forth in the MMFMP with emphasis on compliance with said targets and the Fiscal Rules established in Article 3 of the Fiscal Responsibility Law. This report must: i. Evaluate compliance with the targets and rules established in Article 3 of the Fiscal Responsibility Law ii. Be presented within sixty (60) days following the end of each semester of the year; and iii. Contain the corresponding explanations and corrective measures to be adopted, in case the semi-annual execution deviates from what was programmed. iv. The foregoing must be previously approved by the Cabinet of Ministers at the proposal of the Inter-Institutional Committee created by Article 6 of the Fiscal Responsibility Law. Within SEFIN, the report on the degree of progress with respect to the targets set forth in the MMFMP shall be coordinated by the DPMF with information provided by the Tax Administration, the DGP, the DGIP, the DGCP, the DGID and any other Directorate or Unit that may be necessary, with information available at that date and submitted for approval of the Inter-Institutional Committee.

Registration in the Exonerates Register.- To enjoy exemptions, exonerations and customs franchises, all legal entities must register annually in the Registry of Exonerates administered by the DGcFA, having to present properly legalized documentation that supports said benefit or fiscal privilege. Registration in the Registry shall have a validity period of one (1) year counted from the date of registration. The DGcFA must keep the Registry updated, for which obligated taxpayers must present annually the new documents that modify their tax situation and in turn complete the form established by SEFIN, in which the following shall be indicated at a minimum: 1. Initial investment project and per year of remaining life (when not new), including the fiscal sacrifice and benefits (initial and remaining); 2. Salaries and wages by category and their respective references in the source of the Income Tax, including those not subject to withholding for tax-exempt salary; 3. Investment by type and activity from today onwards 4. Exports and imports (when applicable) 5. Expected social responsibility or charity (as applicable) 6. Exempt and exonerated taxes. With the documentation presented, a unique file shall be formed for each beneficiary, which must serve as reference information for any request made by the beneficiaries in obtaining resolutions concerning exonerations and customs franchises. Applications for dispensation of payment of taxes submitted by beneficiaries registered in the Registry shall accompany, at a minimum, the following documents:

• 1)

  Request for the exoneration of the tax on which it bases its petition; which shall refer to the documentary supports that have already been accredited digitally and physically in its Registry of Exonerates;

• 2)

  Power of Attorney for transit, unless it has accredited General or Special Power of Attorney in lawsuits, which shall refer to its Registry;

• 3)

  List of goods and services in accordance with Article 24 of Decree 278-2013 containing the Law for the Reorganization of Public Finances, Control of Exonerations and Anti-Evasion Measures;

• 4)

  Payment of the corresponding service fees; and, 5. Tax clearance, prior to issuance of the resolution. The DGcFA must notify the institutions that administer the Regime and the Tax Administration of the infraction of non-registration or re-registration, so that they may proceed with the ex officio cancellation of its incorporation therein, and for such case must initiate the administrative proceeding in which the violations are determined. Obligated taxpayers may exercise their right to defense in accordance with the applicable current legal framework. Institutions that administer the Regimes, once the cancellations have been made, shall proceed to remove from their information systems the obligated taxpayers who failed to comply with their obligation to register in the Registry, and proceed with the notification of the act to SEFIN. These communications between involved institutions shall take place monthly, provided that such communication cannot be made through their information systems. Civil servants who incur in the omission of compliance with the obligations described in the preceding paragraph shall be sanctioned in accordance with the applicable current legal framework.

Period for Registration in the Registry of Exonerates.- Legal entities must register in the Registry of Exonerates administered by the DGcFA, no later than within 90 days from the publication of the Regulation of the Fiscal Responsibility Law in the Official Gazette "La Gaceta". Non-submission of the registration request within said period shall be considered as the first notified breach in the previous Article, excepted from this registration failure are all those legal entities that by their date of incorporation are given legal personality during that period, for which they must begin their registration once they obtain the documentation that supports it. Legal entities that are registered in the aforementioned Registry shall only need to revalidate it upon expiration indicated in their respective Certificate; for which they must complete the form published on SEFIN's website and present the supporting documentation for their re-registration.

Non-simultaneity of tax benefits.- Legal entities that enjoy tax benefits granted by special tax regimes shall not be able to simultaneously avail themselves of two or more Special Tax Regimes contained in the Export Promotion Laws or Suspensive Regimes, such as: Temporary Import Regime, Tourism Subsection Regime, Free Zones, Industrial Processing Zones for Exports, Agricultural Export Zones, Free Tourist Zone of Bay Islands, Customs Warehouses, Temporary Warehouses and Duty-Free Shops. The exemptions contained in the laws creating taxes shall be considered as a special tax regime by virtue of their tax nature. Legal entities that have been enjoying more than one tax benefit prior to the effective date of this Regulation must choose which one they would enjoy from said date, proceeding immediately to registration in the corresponding Exempted Entities Registry. Taxpayers who enjoy two or more special regimes must accredit before the DGcFA the resolution of cancellation of the undesired regime, being required to attach it to the application for the elected regime. Once the ninety (90) day period following publication of this Regulation in the Official Gazette "La Gaceta" has elapsed, the DGcFA must notify the Tax Administration and the regulatory entities of the Special Regimes of the database that contains the universe or location of these institutions so that they cancel them in their computer systems. Likewise, these entities must notify the DGcFA once said action has been completed, for which it will be validated within the registry that exists in their files in accordance with the Exempted Entities Registry.

Systematization.- SEFIN through the DGcFA and the DGPT shall chair the Exemptions Board created by Executive Decree PCM-052-2013, which shall be convened by it to clarify the issues that arise due to the implementation and permanent exchange of information.

Prohibitions.- For the purposes of the prohibitions provided for in Article 22 of the Law, national reserves shall be understood as the International Reserves of the BCH.

Transparency in public finance information.- SEFIN must publish quarterly, through electronic means, the information on income, expenses and financing of the Central Administration, General Government and SPNF, forty-five (45) days after the end of the month. The BCH shall provide SEFIN with the information required for compliance with this Article no later than twenty (20) days after the end of each month. All of the above based on the information available to date, obtained from public and private entities, given the existing lags in obtaining the information that the BCH will provide from that available in 20 days, being able to update it within the framework of the 45 days. The BCH shall send SEFIN the following information: 1. Transfers to Debt Relief accounts: Heavily Indebted Poor Countries Initiative (HIPC) and Multilateral Debt Relief Initiative (MDRI) 2. External donations received by the BCH intended for SPNF 3. Summary of Accumulated Flows during the year of External Debt of SPNF 4. Quasi-fiscal Loss of the BCH 5. Debt of Local Governments with the banking system 6. Variation of Inventories of the Rest of the Non-Financial Public Sector CHAPTER IV TRUSTS

Treatment of trusts financed with public resources. All trusts financed with public resources shall be registered in SIAFI for the purpose of promoting transparency and accountability. The settlor must report monthly on the follow-up and results obtained through the Trust.

Expense operations of trusts financed with public resources. The execution of expenses incurred by trusts financed with public resources shall be carried out using the same procedure established in the Organic Budget Law for the execution of expenses of the Central Administration, liquidating the respective accounting operations linked to the trusts. Its registration proceeds in SIAFI and the execution of expenses is subject to audit by the Superior Court of Accounts. In accordance with the provisions of the Organic Law.

Effective date.- This Regulation shall enter into force on the day of its publication in the Official Gazette "La Gaceta". LET IT BE COMMUNICATED AND PUBLISHED. JORGE RAMÓN HERNÁNDEZ ALCERO Secretary of State General Coordinator of Government Executive Delegation Agreement No.031-2015 WILFREDO RAFAEL CERRATO RODRÍGUEZ Secretary of State in the Ministry of Finance