WORLD TRADE  
ORGANIZATION  G/SCM/N/123/HND 
1 November 2005 
 (05-5120) 
Committee on Subsidies and 
Countervailing Measures Original:   Spanish 
 
 
 
SUBSIDIES 
 
New and Full Notification Pursuant to Article XVI:1 of the GATT 1994  
and Article 25 of the SCM Agreement  
 
HONDURAS 
   The following communication, dated 27 October 2005, is being circulated at the request of 
the delegation 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 
 
 2003–2004 
 
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 r esources, stimulating investment and creating 
mechanisms 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 ame nded by Legislative Decree No. 190-86 of 
31 October 1986, Legislative Decree 8-85 of  7 February 1985 and Decree  135-94 of 
28 October 1994, which rescinds the exemption fro m corporate tax for enterprises covered by the 
regime as from that date.  G/SCM/N/123/HND 
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  The Law on Export Processing Zones (ZIP) was designed to promote efficient competition 
with other countries by providing the services a nd incentives needed by foreign manufacturers and 
investors, taking advantage of the geographical position of Honduras in the Central American and 
Caribbean region.  A further aim was to create permanent employment on a large scale, thereby 
helping to diversify the industria l base and generating rapid economic  growth.  This programme has 
its legal basis in Decree 37-87 of 7 April 1987,  which entered into force on 27 April 1987. 
  The purpose of the Law on Free Zones was to ta ke 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 intern ational trade, as well as to cr eate more employment opportunities 
through the establishment of commercial and indust rial 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 and suspension (in the 
case of the Temporary Import Regime) of import duties, taxes and internal charges.  
6. To whom and how the subsidy is provide d (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 eligible under 
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 or any other ta xes or charges, including the general sales tax on 
imports.  Export Processing Zones (ZIP)
 
 
 Benefits are extended to Honduran or foreign natural or legal pers ons eligible under the 
regime as users of the ZIP.  Benefits under the Law
 
  Duly authorized producer companies enjoy to tal exemption from the payment of customs 
duties, sales tax and other taxes, levies, char ges and surcharges on imports.  Sales and output 
generated in the ZIPs and industrial and commercia l property and establishments located therein are 
exempt from state and municipal taxes.  User co mpanies established in a ZIP are exempt from the 
payment of corporate tax on operating profits at the end of the fiscal year.  
Free zones
 
  Free zone benefits are extended to all Honduran or foreign natu ral or legal persons eligible 
under the regime as user operators or users.   G/SCM/N/123/HND 
 Page 3 
 
 
 Benefits under the Law  
  Export-based commercial and industrial enterpri ses, duly authorized at the time of entering 
goods into the free zones, are exempt from the pa yment of customs duties, charges, surcharges and 
other taxes and levies directly or indirectly related to customs import operations.  Sales and output in 
the free zone and commercial and industrial propert y and establishments located therein are exempt 
from the payment of municipal taxes and charges at the end of the fiscal year.  Similarly, companies 
established in the free zone are exempt from the pa yment of corporate tax on operating profits at the 
end of the fiscal year.  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.  The information requested can therefore not be provided.  
8. Duration of the subsidy and/or any other time-limits attached to it, including date of 
inception/commencement 
 
 The benefits currently granted to enterpri ses under the RIT, ZIP and free zone programmes 
are of indefinite duration.  However, under the RIT,  firms are no longer exempt from corporate tax, in 
accordance with Decree 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 determ inable, 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 year s for which statistics are available; 
 (b) for a previous representative year, whic h, 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/123/HND 
Page 4  
 
 ENTERPRISES ELIGIBLE FOR BENEFITS 
UNDER THE SPECIAL REGIMES 
2003–2004 
 
YEAR  NUMBER OF ENTERPRISES COVERED 
 TEMPORARY IMPORT 
REGIME (RIT) EXPORT PROCESSING ZONES 
(ZIP) AND FREE ZONES 
20031 568 280 
20042 329 471 
 
Source : Ministry of Industry and Trade (revised figures)/RIT data 
 Central Bank of Honduras (revised figures)/ZIP and free zone data 
 
 
EMPLOYMENT GENERATED BY ENTERPRISES 
COVERED BY THE SPECIAL REGIMES 
2003–2004 
 
YEAR NUMBER OF JOBS 
 TEMPORARY IMPORT 
REGIME (RIT) EXPORT PROCESSING ZONES 
(ZIP) AND FREE ZONES 
20033 44,917 123,000 
20044 65,486 131,000 
 
Source : Ministry of Industry and Trade (revised figures)/RIT data 
 Asociación de Maquiladores de Honduras  (Honduran Manufacturers Association)  (revised figures)/ZIP 
and free zone data 
 
__________ 
 
                                                      
1 Information for the second half of 2003. 
2 Information for 2004. 
3 Information for the second half of 2003. 
4 Information for 2004.