In accordance with Article 329 of the Honduran Constitution, Próspera ZEDE enjoys an independent special fiscal regime that operates under a territorial tax system. Income derived from sources outside of Próspera is not subject to tax unless explicitly stated in the Próspera Tax Statute.
The Same Four Taxes Apply
Financial service providers are subject to the same four taxes as every other business in Próspera — see the Overview of Taxes for details:
| Tax | Effective Rate |
|---|---|
| Personal Income Tax | 5% of gross income |
| Business Income Tax | 1% of gross income |
| Retail Value Added Tax (VAT) | 2.5% |
| Land Value Tax | 1% (currently suspended) |
There are no additional taxes on dividends, capital gains, or excise taxes. There is also a 100% exemption on import taxes and duties for businesses operating in Próspera, regardless of economic sector (Article 32 of the ZEDE Organic Law).
Special Rules for Financial Institutions
The Próspera Tax Statute contains sourcing rules specific to financial institutions (Section 8 of the Próspera Tax Statute):
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Income tax is charged on interest that arises through or from a financial institution's business in Próspera ZEDE, even if the money in respect of which the interest is received or accrued is made available outside of Próspera.
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Income tax is also charged on income received by or accrued to a financial institution from the sale, disposal, or redemption of a certificate of deposit or bill of exchange arising through or from its business in Próspera ZEDE — even if the moneys laid out to acquire the instrument were made available outside Próspera, or the sale, disposal, or redemption is effected outside Próspera.
In short: if the business generating the income is carried on in Próspera, the income is taxable in Próspera even when the underlying funds or transactions sit offshore.
Most Favored Nation Treatment (MFNT)
Financial institutions may apply to the Próspera Council for Most Favored Nation Treatment. Through MFNT, Próspera ZEDE has the power to match the tax benefits of any other special regime in Honduras, or any other tax jurisdiction competing for a specific company or investment. If a company can demonstrate that its overall tax burden would be lower under a different special regime or tax jurisdiction, Próspera may adopt the necessary exemptions and credits to match the tax burden the company would face under the other regime (Section 8.02(8) of the Próspera Charter and Section 78(1)(d) of the Próspera Tax Statute).
Official Sources
- Taxation of Financial Services — the official service page on the Próspera ZEDE site.
- Próspera Tax Statute (PDF)
Note: This article does not substitute a qualified attorney and should not be construed as legal or tax advice.