Zolitur Exemptions Back … Almost
Lack of Applicable Customs Codes Holds up Restoration of Benefits

June 23rd, 2014

Jerry Hynds, Bay Islands representative in the Honduran National Congress, told a town meeting in Punta Gorda May 31 that tax benefits for the islands under the Zolitur (Zona Libre de Turismo) scheme would soon be resumed.

Jerry Hynds, Bay Islands representative in the Honduran National Congress, told a town meeting in Punta Gorda May 31 that Zolitur benefits would soon be resumed.

Bay Islands Congressman Jerry Hynds announced May 31 that tax benefits for island businesses under Zolitur would soon be restored, but at press time technical issues still prevented eligible firms from importing goods duty-free.

Victor Moncada, chief of communications for Zolitur, said Hynds, Zolitur Executive Director Kendra Jones and Bay Islands business people met with President Juan Orlando Hernandez and Miriam Guzman, director of the Honduran tax authority (DEI), in late May and obtained agreement to restore tax exemptions for existing Zolitur beneficiaries, which were eliminated last December. He said the officials agreed to begin immediately working to establish codes for customs officials to use to exempt Zolitur imports from duties.

“All the (duty) waivers are coming through from Tegucigalpa without any problem,” Moncada said in mid June. “We’re still working on the customs code.”

Zolitur (Zona Libre de Turismo) was created by the Honduran Congress in 2007 to encourage tourism and investment on the Bay Islands by exempting eligible businesses from most taxes and import duties. When President Manuel Zelaya signed it into law on Roatan, he proclaimed nobody here would ever pay taxes again.

In fact, though, Zolitur benefits were bureaucratically cumbersome to claim, relatively few firms went through the process to qualify, and the benefits have not been available for most of the last two years.

In October 2012 the agreement with the DEI that allowed Zolitur staff to issue dispensas authorizing Zolitur licensees to import duty-free expired, and most beneficiaries were unable to claim benefits. No sooner was that issue resolved than the National Congress in January 2013 suspended Zolitur, along with all other Honduran tax-exemption schemes, supposedly for 60 days, while a commission studied their fiscal impact.

Some beneficiaries were briefly able to get dispensas after the 60 days lapsed.   Then in April benefits were suspended again as authorities required each beneficiary to submit documents to revalidate their  eligibility. Meanwhile, in June 2013, then President Porfirio (Pepe) Lobo said Zolitur should be scaled back because it was a “drain” on the treasury.

Later that same month, Marco Ramiro Lobo, president of the commission reviewing tax exemptions, told an audience on Roatan that his commission would recommend to the Congress that Zolitur be continued, with minor changes. By August, some firms were again receiving dispensas.

Then in late December, a lame duck Honduran Congress, as part of a package of budget austerity measures (paquetazo), eliminated essentially all Honduran tax exemptions, including Zolitur. Since then the islands’ elected leaders have been lobbying to get the benefits restored.

“People are really up to the point of desperation for getting their stuff out,” said Moncada.

In fact, for many, the desperation point was passed a long time ago.

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