WORLD TRADE
ORGANIZATIONG/SCM/N/38/HND
G/SCM/N/48/HNDG/SCM/N/60/HND
G/SCM/N/71/HND
G/SCM/N/95/HND
14 October 2003
(03-5434)
Committee on Subsidies
and Countervailing MeasuresOriginal:  Spanish
SUBSIDIES
New and Full and Updating Notification Pursuant to Article XVI:1 of the GATT 1994
and Article 25 of the SCM Agreement
HONDURAS
The following communication, dated 3 October 2003, has been received from the Permanent
Mission of Honduras.
_______________
1. Title of the subsidy programme, if relevant, or brief description or identification of the
subsidy
Temporary Import Regime (RIT), Export Processing Zones (ZIP) and Free Zones.
2. Period covered by the notification
1998-2002.
3. Policy objective and/or purpose of the subsidy
These incentives are designed to promote exports, attract investment, stimulate production
and competitiveness, support human development and create jobs.
4. Background and authority for the subsidy (including identification of the legislation
under which it is granted)
The Temporary Import Regime (RIT) was established for the purpose of strengthening the
Honduran economy, boosting domestic production and increasing exports, promoting employment in
combination with other national and foreign resources, stimulating investment and creatingmechanisms for the development of export industries, creating the necessary conditions for immediate
exploitation of the benefits of the Caribbean Basin Economic Recovery Programme and increasing
foreign trade by fostering export diversification.  The programme has its legal basis in Executive
Decree No. 37 of 20 December 1984, as amended by Legislative Decree No. 190-86 of
31 October 1986 and Decree No. 135-94 of 28 October 1994, which rescinds the exemption fromcorporate tax for enterprises covered by the regime as from that date.G/SCM/N/38/HND, G/SCM/N/48/HND,
G/SCM/N/60/HND, G/SCM/N/71/HND,
G/SCM/N/95/HND
Page 2
The Law on Export Processing Zones (ZIP) was designed to promote efficient competition
with other countries by providing the services and incentives needed by foreign manufacturers and
investors, taking advantage of the geographical position of Honduras in the Central American andCaribbean region.  A further aim was to create permanent employment on a large scale, thereby
helping to diversify the industrial base and generating rapid economic growth.  This programme has
its legal basis in Decree No. 37-87 of 7 April 1987, which entered into force on 27 April 1987.
The purpose of the Law on Free Zones was to take advantage of the geographical location of
Honduras in the Central American and Caribbean region in order to provide opportunities for the
development of domestic and international trade, especially with the neighbouring republics ofCentral America, as well as to create more employment opportunities through the establishment of
commercial and industrial free zones.  It has its legal basis in Decree No. 356 of 19 July 1976, as
amended by Decree No. 131-98 of 20 May 1998, whereby the title of the law setting up the Free Zone
of Puerto Cortés was changed to Law on Free Zones and the benefits and provisions of the law are
extended to the entire national territory.
5. Form of the subsidy, i.e. grant, loan, tax concession, etc.
The only benefits granted under special regimes are exemptions from import duties, taxes and
internal charges.
6. To whom and how the subsidy is provided (whether to producers, to exporters, or
others;  through what mechanism;  whether a fixed or fluctuating amount per unit;  if
the latter, how determined)
Temporary Import Regime
The beneficiaries of the Temporary Import Regime are natural or legal persons affiliated to
the regime.
Benefits under the Law
Producers/exporters duly authorized under this regime are not subject, when importing goods,
to the payment of customs duties and any other taxes or charges, including the general sales tax onimports.
Export Processing Zones (ZIP)
Benefits are extended to Honduran or foreign natural or legal persons eligible for inclusion in
the regime as users of the ZIP.
Benefits under the Law
Duly authorized producer companies enjoy total exemption from the payment of customs
duties, sales tax and other taxes, levies, charges and surcharges when effecting imports.  The sales and
output generated within the ZIPs and the industrial and commercial property and establishments
located therein are exempt from municipal taxes.  User companies established in the ZIPs are exempt
from the payment of corporate tax and tax on operating profits, at the end of the fiscal period.G/SCM/N/38/HND, G/SCM/N/48/HND,
G/SCM/N/60/HND, G/SCM/N/71/HND,
G/SCM/N/95/HND
Page 3
Free zones
Free zone benefits are extended to all natural or legal persons, whether nationals or
foreigners, eligible for inclusion in the regime as user operators or users.
Benefits under the law
Export-based commercial and industrial enterprises, duly authorized at the time of entering
goods into the free zones, are exempt from the payment of customs duties, charges, surcharges and
other taxes and levies directly or indirectly related to customs import operations.  Sales andproduction which take place within the free zone and the commercial and industrial property and
establishments located therein are exempt from the payment of municipal taxes and charges, at the
end of the fiscal period.  Similarly, enterprises established in the free zone are exempt from the
payment of income tax on operating profits at the end of the fiscal period.
7. Subsidy per unit, or in cases where this is not possible, the total amount or the annual
amount budgeted for that subsidy (indicating, if possible, the average subsidy per unit in
the previous year).  Where provision of per unit subsidy information (for the year
covered by the notification, for the previous year, or both) is not possible, a full
explanation.
Owing to the nature of the programmes, it is not possible to calculate the amount of the
subsidy per unit.  Accordingly, the information requested cannot be provided.
8. Duration of the subsidy and/or any other ti me-limits attached to it, including date of
inception/commencement .
The benefits currently granted to enterprises under the RIT, ZIP and free zone programmes
are of indefinite duration.  However, under the RI T, firms are no longer exempt from corporate
income tax, in accordance with Decree No. 135-94 of 28 October 1994.
9. Statistical data permitting an assessment of the trade effects of the subsidy.  The specific
nature and scope of such statistics is left to  the judgment of the notifying Member.  To
the extent possible, relevant and/or determinable, however, it is desirable that such
information include statistics of production, consumption, imports and exports of the
subsidized product(s) or sector(s):
(a) For the three most recent years for which statistics are available;
(b) for a previous representative year, which, where possible and meaningful, should be
the latest year preceding the introduction of the subsidy or preceding the last major
change in the subsidy.G/SCM/N/38/HND, G/SCM/N/48/HND,
G/SCM/N/60/HND, G/SCM/N/71/HND,
G/SCM/N/95/HND
Page 4
ENTERPRISES ELIGIBLE FOR BENEFITS UNDER
THE SPECIAL REGIMES
1998-2002
YEAR NO. OF ENTERPRISES COVERED
TEMPORARY IMPORT
REGIME (RIT)EXPORT PROCESSING ZONES
(ZIP) AND FREE ZONES
1998 492 198
1999 503 215
2000 513 218
2001 543 230
2002 561* N/A
Source:   Ministry of Industry and Trade (revised figures)/RIT data
Central Bank of Honduras (revised figures)/ZIP and free zone data
N/A:  Not available
*  Information for the first half of 2002.
EMPLOYMENT GENERATED BY ENTERPRISES COVERED BY
THE SPECIAL REGIMES
1998-2002
YEAR NO. OF JOBS
TEMPORARY IMPORT
REGIME (RIT)EXPORT PROCESSING ZONES
(ZIP) AND FREE ZONES
1998 90,464                         98,905
1999 85,415                       103,271
2000 56,083                       106,530
2001 47,427                         93,816
2002 53,097*                            N/A
Source:   Ministry of Industry and Trade (revised figures)/RIT data
Central Bank of Honduras (revised figures)/ZIP and free zone dataN/A:  Not available
*  Information for the first half of 2002.
__________