Alas Poor Zolitur, We Knew It
Importers Feeling Pinch from Never-Ending Free-Zone Imbroglio

June 21st, 2013
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[private]Butch Wade of the Bulk Gourmet in French Harbour ordered a large shipment of wine and liquor that was on its way to Roatan in January when the Honduran Congress decided to suspend duty-free imports to the Bay Islands, together with all other Honduran tax exemptions, supposedly for 60 days. As of June he was still waiting to receive his goods.

Marco Ramiro Lobo, president of the commission that is reviewing all Honduran tax exemptions, fielded questions at a June 13 forum at Plaza Mar, Roatan, on the status of the ZOLITUR Bay Islands free zone.

Marco Ramiro Lobo, president of the commission that is reviewing all Honduran tax exemptions, fielded questions at a June 13 forum at Plaza Mar, Roatan, on the status of the Bay Islands free zone.

“We have a law that says we’re duty free,” said Wade, “but they’re not applying the law.”

Wade is one of many importers whose businesses have been crippled by the legal, political and bureaucratic problems surrounding the preferential tax scheme for the Bay Islands known as ZOLITUR.

When it was enacted in 2007, the Zona Libre Turística was supposed to exempt island businesses from most Honduran taxes to attract investment and encourage tourism development. Congress voted to  temporarily suspend those benefits in January to help extract itself from a fiscal hole. A Presidential Commission was created to evaluate all tax exemptions to assure that all beneficiaries were duly qualified.

Carlos Flores, secretary general of ZOLITUR, said the issue had already been “solved” and the suspension “really ended in March.” Beneficiaries simply need to  obtain a dictamen from ZOLITUR and from the Presidential Commission stating they qualify for the benefits, he said, then get a resolution from the Ministry of Finance. He said the whole process should take only two to three weeks and the majority of those who had applied had already gotten their resolutions.

Alejandro Tugliani, a Roatan lawyer specializing in ZOLITUR, called Flores’s assessment “naive and irresponsible.”

“I don’t see that things are getting better,” he said. “Quite the opposite.”

Tugliani acknowledged some “big developments,” like the cruise ship port, got resolutions in early June. But he said they had applied for them six months earlier. And he said the situation was very different for smaller businesses, especially those that import jewelry, liquor, perfume and tobacco.

“The Presidential Commission has determined that those sectors are not worthy of tax benefits,” Tugliani said. “They’re killing the whole cruise ship industry. People are hurting.”

Indeed, Sara Castro Hunt, an accountant and ZOLITUR consultant based in Roatan’s Gibson Bight whose clients are mostly small and medium-sized, said she had a client that sold jewelry in the cruise ship port that had been unable to get some merchandise out of customs since last October, when ZOLITUR stopped issuing dispensas, which certify duty-free status, because its agreement with the Honduran tax authority (DEI) allowing it to issue the documents on Roatan expired. No sooner was that issue resolved, she said, than Congress suspended ZOLITUR altogether.

Sara Castro Hunt, an accountant and ZOLITUR consultant, said at least three of her clients had gone out of business in the past six months.

Sara Castro Hunt, an accountant and ZOLITUR consultant, said at least three of her clients had gone out of business in the past six months.

Castro said there was a brief window in March, after the 60 days stipulated in the decree suspending ZOLITUR lapsed, that her clients got what they needed to resume importing duty-free. But then just before Holy Week ZOLITUR began demanding that each former beneficiary individually apply to revalidate its qualifications for the benefits.

“They said, ‘Oh, no, wait. Now we have to analyze each company, and I need these and these and these and these documents from you,’” said Castro. As of June 10, she said, not one of her clients had made it through that recertification process. “They’re still analyzing each file to see if they are going to keep their (ZOLITUR) license or if they’re going to take it away.”

Castro said one of her clients, which had already been having problems with ZOLITUR before the January suspension, opted to close its doors after Congress suspended the program. She said two others expected to go out of business by the end of June. Many others had merchandise stuck in customs. Some, she said, were simply paying the duties and hoping to get credit back for those payments once the problems with ZOLITUR are resolved. But for large shipments, that’s not so easy.

“I’ve got $40,000 worth of liquor on which they want $30,000 in duties,” said Wade of Bulk Gourmet. “We can’t afford to pay the duty.”

Wade said his business supplied wine and spirits to many Roatan hotels, resorts and restaurants, which consequently find themselves in a bind as well. Quentin McKay, co-owner of the Java Vine café and wine bar in West Bay, said he was having to “scrounge” for bottles from other sources since it became harder to get them from Bulk Gourmet. Some West End bars also report problems stocking their shelves.

“I’ve got wine that’s been sitting in customs four months,” Wade said June 6. “I don’t know whether they’re going to be any good. This has just gone on too long.”

Honduran President Porfirio (Pepe) Lobo was quoted in the national press June 6 saying ZOLITUR should be scaled back because it was a “drain” on the treasury.[/private]

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