The Honduran Congress approved major changes to the controversial security tax law. The initial 5-year temporary law was challenged on constitutional grounds. The changes are a result of consensus among the business, banking, and political sectors and the law is estimated to collect L.2.2 billion annually (about US $79 million), of which L.1.5 billion will go to a security fund and 700 million will go toward social projects. Others from the private sector, however, project that the law could result in tax revenues of as much as L.3 billion per year.
President of the Congress, Juan Orlando Hernández, declared,"We are in a national emergency. The theme of crime is intolerable. We can't wait any longer to give a response to the people. With these changes we will assure that the Secretaries of Security and Defense, the Attorney General, and the Supreme Court will have the resources to improve their work." Honduras has the distinction of having the highest reported homicide rate in the world, with current 2011 estimates being between 78-86 per 100,000, compared to a worldwide average estimated at about 8 per 100,000.
According to the Congressional bulletin on Wednesday, some of the changes are:
- The tax rate has been reduced from 0.3% (.003) to 0.2%.
- The tax has been eliminated from savings accounts withdrawals of any amount for individuals (natural persons) but will be applied for debits to checking accounts with average balances above L.120,000.
- Businesses (personas jurídicas - legal entities) will pay the tax on withdrawals on savings and checking accounts with average balances above L.120,000 or US $6,000.
- A new annual tax will be charged on credit card renewals based on the amount of the credit limit, as follows:
- L.40,000: no tax
- L.40,000 up to L.50,000: L.500
- L.50,000 up to L.100,000: L.600
- L.100,000 up to L.200,000: L.700
- L.200,000 up to L.1 million: L.800
- L.1 million and over: L.1,000
- The tax on bank loan disbursements has been reduced from 0.3% to 0.15% and will completely absorbed by the bank who emits the credit.
- For bank transfers within the country, the base taxable amount has increased from L.10,000 to L.20,000.
- Still excluded from taxation are international transfers (remesas).
La Tribuna additionally reports that persons or businesses involved in mining will be charged 2% (.02) on exportations, reduced from 5%.
The "Special Contribution" of mobile phone companies will remain at 1% of monthly gross income and that of casinos will remain at 1% of monthly income. International fast food franchises will be charged 0.5% on gross monthly revenue, making this the first time that fast food restaurants have been subject to tax.
See previous article about the Security Tax for more details: Dollars and lempiras, taxes and interest