Honduras
The country profile includes data on the income taxes paid by workers, their social security contributions, the family benefits they receive in the form of cash transfers as well as the social security contributions and payroll taxes paid by the employers. Results reported include the average and marginal tax burdens for eight different family types.
It also describes the personal income tax systems, all compulsory social security contribution schemes and universal cash transfers as well as recent changes in the tax/benefit system.
The national currency is the Lempira (HNL). In 2013, the average exchange rate was HNL 19.73 to USD 1. In that year, the average worker earned HNL 115 465.02.
The Report includes estimates of the tax wedge over the whole of the income distribution ordered by deciles of total labour income of formal wage earners derived from the household surveys.
1. Personal income tax system
The fiscal year is the calendar year.
1.1. Central government income tax
Law decree No. 25-63 establishes the income tax in Honduras. This tax applies to employment income, self-employment, business income and investment income. It covers all kinds of profits, rents, gains, utilities, dividends, salaries, wages, and fees.
Employment income refers to salaries, pensions, bonuses, commissions and benefits in kind paid to an employee in exchange for his work.
Exempt income – the most notable types of income relating to employment are:
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Vacation bonus of up to thirty days paid in accordance with the Labour Code.
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The thirteenth and fourteenth months’ bonuses up to ten times the average minimum wage, in each case.
1.1.1. Tax unit
Members of the family are taxed separately.
The personal income tax is applied to residents and other persons residing in Honduras for more than 3 consecutive months, regardless of their nationality.
1.1.2. Tax allowances and tax credits
1.1.2.1. Standard tax allowances and tax credits
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A basic allowance of HNL 40 000.
1.1.2.2. Main non-standard tax allowances and tax credits
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Donations and bequests to the state, municipalities, education institutions, sports or charitable institutions up to10% of the taxable income.
1.1.3. Tax schedule
The personal income tax liability was calculated on the taxable income according to the following schedule in 2013:
1.2. State and local taxes
No state or local taxes are levied on wages.
2. Compulsory social security contribution to schemes operated within the government sector
2.1. Employee contributions
The employee contributions are levied on gross wages. The lower threshold is the monthly minimum national wage, which was equal to HNL 6 670.85 in 2013. The upper ceiling is HNL 7 000 according to the SOJD Resolution No.02-29-02-2011 that applied for that year. The thirteenth and fourteenth month bonuses are exempt from social security contributions.
2.2. Employer contributions
Employers are required to contribute to the following public programs.
The employer contribution rates are applied to the payroll.
3. Universal cash transfer
3.1. Amount for spouse and for dependent children
None.
4. Main changes in tax/benefit since 2013
In July 2015, a social security law was passed introducing a new multi-pillar social security scheme. The program is structured with a collective capitalization pillar and a complementary pillar with individual accounts. The most important development is that employers will make a new payment of 4% of the payroll in respect of labour insurance. Companies with less than 10 workers are exempt from this contribution until January 2018.
5. Memorandum items
5.1. Identification of an AW
The data refer to the earnings of workers within the formal sector. The average worker’s wage was calculated using microdata from the national household surveys.