The Law of Incentives for Tourism
24 November 2000
By Melanie Wetzel

In 1998, after Hurricane Mitch, a new law was created called the Law of Incentives for Tourism. This replaced the old ZOLT law (Zona Libre Turistica, or Tourism Free Zones), and is designed to motivate investment in the tourism infrastructure.

The benefits of the law are very attractive. Qualifying tourism projects receive a ten-year exoneration from income tax and can import necessary materials and items related to the construction of the project duty free. They can also import printed publicity free of tax and are exempt from some municipal fees on events.

New tourism projects in the following categories are eligible:
1. Hospitality (hotel, motel, etc.)
2. Food and drink
3. Air, sea and land transport (exclusively for tourists)
4. Recreation centers
5. Art and artensania
6. Tour operators
7. Cultural events
8. Convention and meeting facilities
9. Auto rental
10. Cultural education and tourism institutions

Also to be eligible, logically, it must be a project that will be or is operating legally. There must be a legally declared commercial entity (corporation) or a declaration of an individual merchant.

Small projects may find the amount of paperwork and legal processes are not cost effective for the benefits received. But for any project that will involve importing construction materials or high-value items such as vehicles or kitchen equipment, it is definitely worthwhile to plan ahead and submit the plans for approval.

To qualify for the benefits a project must have a legal representative (Licenciado or Abogado) present a petition along with the following documentation to the Ministry of Tourism:

1. Authenticated copy of the declaration of individual merchant (commerciante individual) or corporation
2. Authenticated copy of title of ownership or rental agreement for the property on which the project will be constructed.
3. Economic study of the proposed business, prepared by an economist (licensed in Honduras) according to the Ministry of Tourism guidelines.
4. Architectural plans of proposed construction and topographical plan of current state of the property.
5. A bank statement of solvency or credit sufficient to cover the proposed project.
6. Environmental license (Licencia ambiental) from the Ministry of Natural Resources and Environment (a copy of the application will do).
7. Application and payment of membership in the National Registry of Tourism

A list of proposed items to import should be included.

The most common snags in the process result from projects that don't qualify as strictly tourism (such as transportation companies that will also service a local market).

Also the list of items to import will be carefully reviewed. Items that are produced in Honduras (such as some furniture and clothing/uniforms) and items that are considered consumables (such as shampoo for hotels) will be excluded from the list.

But paying import duties on a couple hundred mini-bottles of shampoo is much less taxing when you get to import the shower heads, tiles, hot-water heater, and mirrors duty free.

Melanie Wetzel is a practicing lawyer in Tegucigalpa, specializing in commercial and tourism law. She has also written the Legal Forum in Honduras This Week since 1997. www.netsys.hn/~mwetzel