In Honduras, the Value Added Tax (VAT), locally known as Impuesto sobre Ventas (ISV), plays a crucial role in generating government revenue. It is applied to the sale of goods and services, as well as on imports. Businesses and consumers alike must understand the different VAT rates to remain compliant and make informed financial decisions.

VAT Rates in Honduras (2025)

Type of Rate Rate (%) Applies To
Standard Rate 15% Most goods and services
Increased Rate 18% Alcohol, tobacco, certain luxury items
Reduced Rate 0% Basic food, medicine, medical services
Exemptions N/A Education, banking services, public transport

Different VAT Rates on Goods and Services

  • Standard Rate (15%)
    This is the most commonly applied VAT rate in Honduras. It affects a broad range of consumer goods and services, including electronics, clothing, household items, and general commercial services.
  • Increased Rate (18%)
    Certain products deemed non-essential or luxury, such as alcohol, cigarettes, and high-end goods, are subject to an additional 3% surtax, bringing the total VAT to 18%.
  • Zero-Rated (0%)
    Essential items such as basic foodstuffs, prescription medicines, and healthcare services are taxed at a 0% VAT rate. This ensures affordability and accessibility for the general population.
  • Exempt Services
    Key public interest services like education, public transportation, and financial services (e.g., banking, insurance) are exempt from VAT entirely, meaning no tax is charged or recoverable.

Conclusion

Understanding the VAT system in Honduras is essential for businesses operating within the country and consumers making purchasing decisions. With a standard VAT rate of 15%, a higher rate of 18% on luxury goods, and exemptions for essential services, the tax structure aims to balance revenue generation with social equity. Always check current regulations or consult a local tax advisor to ensure compliance and proper financial planning.

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