At one time, Honduras was considered to be the "black sheep" of Central America, however, Honduras' stable  Government , many resources, and other opportunities  have made the  country  very attractive to the  foreign investor  and retirees ...

A large part of Honduras is mountainous and compares in size to the state of Ohio and is the second largest Central America nation, Nicaragua being the largest. The country is divided into 17 regions and is bordered by both the Pacific ocean and the Caribbean Sea...

The cost of living  is considered to be one of the most reasonable in the world. Honduras also has the lowest hourly wages for   workers  in Central America. You can purchase a large home with a pool for as low as $50,000...

The government  began an aggressive marketing plan in the early 1990's and has established a series of attractive  investment incentives for the  foreign investor ...

Due to the  investment incentives, a large number of companies from Hong Kong, Taiwan, Singapore, South Korea, and many others have located factories in Honduras, the most popular known as "Maquiladoras", garment assembly factories...

In spite of Honduras' neighbors involvement through generations of civil wars, Honduras has remained a peaceful country through compromise and inter country relations...

CITIES OF HONDURAS

Official Name............................................................. Republic Of Honduras

Capital........................................................................ Tegucigalpa

Population Estimate.................................................. 6 Million

Government................................................................ Democratic & Representative Republic
Living Environment

Pros..................Very Low Cost Of Living,Beautiful,Nice Climate,Environment Differences

Cons........................................................................... Irregular Justice System
Business Environment

Pros.............................Stable Government, Great Investment Opportunities and Low Wages

Cons......................................................................... Government not Efficient

Official Language................................................... Spanish

Currency.................................................................. Lempira

Exchange Rate ............................Changes Weekly, As Of  Oct 15, 1998, U.S. $1.00 = L 13.635

Country Code.......................................................... (504)

Time Zone............................................................... U.S. Central Standard

Strongest Foreign Revenue................................... Bananas & Coffee

For the most part, Honduras is a mountainous country. 25% of the land is considered suitable for farming. It has many beautiful highland valleys. The highest peak in Honduras is Cerro de Las Minas (Hill of the mines). Its peak towers 2866 meters (9,460 ft) above sea level.

The Caribbean coast line extends about 400 miles while the Pacific coast line is only 76 miles long. Honduras also has many small islands off both coast, the most popular with tourist is  The Bay Islands  off the Caribbean coast.

The majority of the population lives in the northern and central southwest regions of the country where the capital, Tegucigalpa and the main industrial center,  San Pedro Sula  are located.

Honduras formed  Part of the great Mayan Empire with Belize and Guatemala. The astonishing ruins are mainly located in Copan, near the Guatemalan border. These ruins were discovered in 1839 and restored by the Carnagie Institute in the 1930's. These ruins contain the some of the best Mayan art in Central America. This is one of Honduras' main attraction sites for tourist, coupled with the Caribbean coast.

Christopher Columbus discovered Honduras in 1502. The country afterwards was the subject of land struggles among it's Spanish settlers until the conquistador Pedro de Alvarado arrived in 1536 and founded the city of San Pedro Sula , today the major industrial area.

After a prosperous colonial period, Honduras was incorporated into the General Captaincy of Guatemala established by the Spanish to facilitate political control over the region. With the discovery of small amounts of silver in 1578, the country rapidly colonized.

1821 the growing Central American nations proclaimed their independence from Spain and joined together over the next 17 years as the Federal Republic of Central America.

During the revolution in 1955, the army seized power from the chief of state and established a military council that pledged to return to freely elected constitutional rule.

1952 a new constitution was drafted. and the ruling Liberal party became the first elected congress. Discontent and demand for reform sparked two additional military coups. The country made great progress under General J.A. Melgar from 1975 to 1978. He was later ousted by the military and replaced with a three man junta led by General Policarpo Paz Garcia.

Garcia established a new constitution and free election. 1981 Roberto Suazo Cordova of the Liberal Party was the first elected president. Today, free elections are being exercised.

In 1982, the Constitution established a popularly elected executive branch and a government appointed judiciary, which is made of the Supreme Court of Justice, and Appeals Court, and several jurisdictional courts.

Congressional seats are assigned to party members based upon the number of votes the party receives, with proportional representation. Members of Congress and the President elect serve four year terms in office.

The country  is divided into 18 political jurisdictions. Municipal and departmental officers serve two year terms.

Honduras is a developing country with agriculture as its economic base. The country  has one of the lowest gross national products in Central America. The unemployment rate has improved at a current rate of 12 percent. The inflation rate on the rise is at 22 percent.

The nation's major exports being coffee, bananas, and lumber. These agricultural based industries employ over 60 percent of the common workers  and provide 80 percent of the country's exports. The European Union purchases approximately 65 percent of the country's exports.

Non-traditional exports such as melons, shrimp, fish, and frozen fruits are gaining ground.

During Nicaragua's civil war in the 1980's, the United States supplied massive aid to Honduras in exchange for strategic border territories for deployment of the U.S. backed contras. Although the need has diminished, the countries still have strong economic ties.

U.S. agricultural companies such as Standard Fruit (Dole) and United Fruit are Honduras' major banana producers and own large tracts of Honduran land.

When Honduras was discovered by Christopher Columbus in 1502, the main population was made up of  ethnic groups of mixed Mayan decent. The Honduran people are an ethnic mix of native indian, Spanish, and other nationalities. There is a large black english speaking population along the Caribbean coast.  The Bay Islands  official language is english.

Hondurans are a peaceful, conservative, family oriented people. The strongest bonds revolve around the female. The majority are Catholic, and religion  is a major force in their society, but does not effect their business relations.

In the larger cities, men and women are usually considered equal. Both pursue college  education's, careers, and participate in politics. Both are taken serious in business negotiations and in managerial positions. A higher education is respected and pursued in all circles.

In Honduras it is more important to complete transactions than to worry about a time schedule. Committing to a time frame is considered more a goal to achieve. They tend to try to build long solid relationships and establish close links with their clients.

The cost of living is between 1/3 and 1/2 lower than their Central American neighbors and is considered to be one of the most reasonable in the world.

A three bedroom home with a pool, tennis court, maids quarters,  and plenty of land in what is considered to be the more exclusive areas would sell for around $80,000.

Additional expenses for a live in house keeper, telephone, electricity, and air conditioning would add another $150.00 to your monthly budget.

 Resident expatriates  calculate a couple can live comfortably on $700.00 per month, if they own their home.

Many of the supermarkets carry imported items and brand name products such as Campbell's and Kellogg's, however, because of the import taxes and transportation cost, these products are much higher than locally produced products. Usually 2-3 times higher priced.

A couple consuming only locally grown fresh products can easily stock their shelves for under $150.00 per month.

Considerable savings can be had  shopping in the open air markets and avoiding the large supermarkets. A couple can easily buy everything they need in one of these markets for a week for around $6.00 - $10.00.

Although men and women are considered equal in the urban areas, men are usually very possessive of women. Being overly friendly, staring at, or greeting a woman with a kiss are generally considered social taboos. Embracing is not taken well by male or female.

The mother is considered as the family leader and is usually the principal money earner. It is a grave offense to insult someone's mother. Grandparents and elders are also highly respected.

Professionals should always be addressed by their title. University graduates are known as "Licenciados".

Honduras has a tropical climate that varies allot from one part to the other, depending upon the region. Tegucigalpa, the Capital city ranges between 59 degrees and 85 degrees. Rain falls throughout the year on the north coast, while the rest of the country has it's heaviest rain fall between May and November. Lake Yojoa receives the most rain fall throughout the year, averaging 225 inches.

Between May and November rainy season the climate is temperate. In March and April the warm days usually will have cool nights and December through February it is typical to have cool, dry days and chilly nights.

Business is conducted Monday through Friday and until noon on Saturday. Commercial business hours are from Monday through Friday: 9:00 A.M. to noon and 2:00 P.M. to 6:00 and Saturday 9:00 A.M. to noon.

Lunch and business appointments are common here and usually last more than two hours.

Almost all cities and major towns have post offices. The mail services generally can not be relied upon like they are in the U.S.

To receive mail, it is best to have it sent to the Lista de Correos in Tegucigalpa. You should have the mail addressed to your last name only to avoid confusion. You will usually need to show identification to receive your mail.

There are also a number of private mail companies that have been established in response to the generally poor mail service. They will assign you a U.S. address, usually in Miami and they charge a fee around $8.00 to $ 10.00 per month or more, depending upon the volume you receive and sent.

The telephone system in Honduras is excellent in the metropolitan areas. You may experience frequent outages in the remote rural areas, however almost every town has a telephone office. There are also a growing number of Internet Access Providers in the major cities. Direct international calling is available.

The Honduran currency is called the Lempira, named after a Mayan Chief who fiercely resisted Spanish Subduction. The bills include one's, two's, five's ten's, twenty's, fifty's, and one hundred Lempiras.

Coins are minted into one, two, five, ten, twenty, and fifty centavos.

U.S. Currency is very easy to change in both the banks and the "black market". Usually a better rate of exchange will be paid on the black market.

Although there are several banks located in Honduras, there is only one main  country bank ,The Central Bank, who also determine the rate of exchange weekly for the other banks. These banks include Banco Central de Honduras, Banco Atlantida, and Banco de Honduras. Almost all banks offer full services such as wire transfers, Western Union, and check writing.

The current rate of exchange as of  January 28, 1999 is U.S. $1.00 = L 14.02

Spanish is the official language in Honduras' mainland and is also the preferred language for conducting business transactions. There is a large amount of English/Spanish (Spangles) speaking bi-linguals throughout the country. On The Bay Islands  many natives only speak english. All trade literature, correspondence, and legal contracts should be written in Spanish to be legally binding.

The common employee in restaurant, grocery stores, commercial shops, only speak Spanish.

Tourist from the U.S., Australia, Canada, Japan, New Zealand, and most of the European countries, can enter and stay in the country for up to 30 days.

Once in the  country , you can obtain an extension for a total stay of up to an additional 5 months and can be applied for in the immigration office for a small fee. If you care to overextend your stay, you may need to leave the country and re-enter after 3-5 days. In doing so this will renew your amount of time you are allowed to stay. Due to government  corruption, many tourist pay the immigration official as opposed to leaving the country.

Visa requirements are continually changing. To get the most recent requirements you should contact the nearest Honduran Embassy or check at the boarder.

Honduran workers are some of the lowest paid in Central America. This is the main reason many labor intensive companies are locating in Honduras. The following is a list of typical salaries paid to workers.

Maids, gardeners, and other domestic workers......................... $   55.00 per month

Teachers................................................................................. $130.00 per month

Bus Drivers............................................................................. $160.00 per month

Professionals.......................................................................... $450.00 per month

Secretaries............................................................................. $165.00 per month

The above wages reflect the major metropolitan salaries. The salaries could be considerably less in rural areas. There are many skilled and unskilled workers. Agriculture is the main employment in the rural areas while the garment industry boom provides more than 100,000 jobs. A big percentage of senior managers have attended college abroad.

Electric current is of both 110 volts and 220 volts. Outlets are the same flat pinned type as in the U.S.

The cost of an electric bill will range anywhere from $5.00 per month to $75.00 per month depending upon your location and the amount consumed.

Water is generally considered not safe for human consumption. Most people buy bottled water for drinking and cooking. This is not a big inconvenience due to the bottled water trucks that deliver to your door. 5 gallons of purified water will cost around U.S. 75 cents. A typical water bill is hardly worth mentioning, around $2-$5.00 per month. Depending upon where you live it may be provided free of charge.

Casual summer type clothing is suitable for most of the year, where the weather is warm by day and cool at night. During the rainy season, November to February it sometimes is chilly during the day, so wear light wool or long sleeves.

Business dress- Suits or jackets for men and dresses and skirts for women are typical Honduran dress style for business. Professionals are expected to dress fashionably. The dress code in the outer coastal regions are somewhat different and relaxed. Shorts are only worn on the beach.

Most Hondurans do not tip, however up to 10 percent is usually appropriate in tourist areas.

Seafood, tortillas, beans, enchiladas, corn tamales, tripe and a vegetable and meat soup are among the favorite Honduran dishes. The most common plate offered in almost all restaurants is called the "plato typico", which includes tortillas, meat, beans, cheese, and sometimes plantains.

Seafood is inexpensive and popular on the coast. The "sopa de caracol" or counch and coconut soup is very good.

There a four brands of national beer, Port Royal, Imperial, Salva Vida and National. Honduras' own national brand of liquor is made from fermented sugar can.

Honduras is generally a safe country , however use common sense. As in any major city, some areas are considered not safe at night. Many of the country's 30,000 military men will be often seen at road blocks checking documents, searching for weapons, or drugs. Usually western visitors have nothing to worry about.

National Holidays

January 1 ................................................................................ New Years Day

April 14............................................................................. Day of the Americas

March or April................................................................................. Holy Week

May 1.............................................................................................. Labor Day

September 15..................................................................... Independence Day

October 3..................................................................... Francisco Morazan Day

October 12................................................................ Discovery of America Day

October 21....................................................................................... Army Day

December 25................................................................................... Christmas

During  all holidays, almost everyone will set off fireworks on a very large scale, including Christmas and New Years Eve. This is a sight that is a must see.

Almost every town has an abundance of discotheques and are usually full at night for great dancing. Most are considered safe, but again, as in any city, use precaution at night.

Movies are very inexpensive and plentiful in Honduras. Films are usually shown in english, or their country language of origin, with Spanish subtitles. A ticket cost around $1.50.

Gambling casinos are also located in the larger cities and in some of the small cities, even the mom and pop hotels may have slot machines.

The Teatro National Manuel Bonilla is a mecca for culture lovers, featuring first rate stage plays and other cultural events.

About 90 percent of Hondurans are Roman Catholic, however there are many other Christian religions including, Mormons, Jehovah's Witnesses, Seventh Day Adventists, Baptist, Pentecostals, Assembly Of God, Evangelicals, and more. There are also many Indigenous groups that freely practice their own religion. Some people open their homes for  weekly or nightly prayer or services.

Honduran people are warm and open to foreigners. Whether you meet an official from the Capital city, an executive from  San Pedro Sula , A farmer, or a fisherman, you will find that Hondurans have unlimited pride and will always extend a welcoming hand. There is always plenty to see and do, so enjoy the  country  as you please, relaxed and filled with new sights and friendship.

The beautiful mountainous landscape, which is complemented by many years of hard work, will make the tourist or the resident feel right at home. Lovely beaches, crystal clear seas, tropical islands, surrounded by some of the most magnificent coral in the world, (a paradise for divers), mountains and forest are the gifts that captivate visitors from all over the world.

Foreigners spend their time hiking in the great mountain peaks, fishing, water sports, and exploring ancient Mayan ruins. Museums, galleries and craft centers also offer many cultural and historical entertainment.

Modern shopping centers, movie theaters, clubs, restaurants, malls, and supermarkets are plentiful in Honduras. Many are similar to those found in the U.S. and Europe.

Many foreigners live throughout Honduras and in  The Bay Islands .

Tegucigalpa, the Capital, is very busy and noisy divided by the Choluteca River. The city center and affluent business district occupies the east side of the river while the lower income district of Comayaguela is located on the west side.

Home prices in the most affluent areas range from $70,000 to $250,000. A large 5-6 bedroom luxury residence with a pool and a beautiful view can be had for around $200,000. Rents range from $500 to $1,800 per month.

In a decent safe middle class area, a large 4 bedroom home with a pool can be purchased between $25,000 to $60,000, and rents would run from $250 to $400 per month.

In the outlying coastal towns, the  cost of living  is less real estate can be found at a real bargain. The bay town of Trujillo offers many real estate bargains. For example, An acre of land, depending upon its location and the amount of acreage, can be purchased between $100 to $1,000 and a nice 3 bedroom home with a pool can be purchased between $20,000 to $50,000. You can rent a new 5 bedroom home, close to the beach front, with a pool and a tennis court for around $600 per month. A smaller clean two or three bedroom home can be rented for around $100 per month and purchased of as low as $10,000.

Located 265 km. northwest of Tegucigalpa, and is considered the fastest growing city in Central America. The city has a nice pleasant atmosphere, without pollution or the hectic street life of the Capital city. It is the Industrial Capital of Honduras. Since San Pedro Sula is newer than Tegucigalpa, it has a better city layout, wider streets, and more of the modern shopping malls.

Most of the incoming factories from foreign countries are locating in San Pedro Sula.

This is the second largest city of Honduras and its industrial and commercial center. Located on the North Coast (Atlantic/Caribbean side) about 30 miles inland. Here you will see vast banana plantations in the surrounding areas. These plantations are largely owned by the United Fruit Company. The population is about 900,000.

Warmer than Tegucigalpa, it has an average temperature of 80F to 90F degrees year round. November through February being the coolest months.

San Pedro Sula is located in the Sula Valley and is flat in comparison to the mountainous Tegucigapla. Urban problems exist here too, but not to the great extent as the capital. Often SPS is used as a visitors base for visiting other parts of Honduras such as changing planes to go the Bay Islands, visit Copán or the North Coast.

Just off the Caribbean coast is the Bay Islands, known for their crystal clear waters and white powdered sands. Investors have already discovered the three islands, Roatan, Guanaja, and Utila, and the prices reflect this.

Of the Bay Islands, most expatriates live on Roatan, population, 14,000. The population is less on Guanaja, population 8,000, but the prices of real estate are 40 to 50 percent less than Roatan.

Roatan is the most developed of the three islands and is more expensive because of this. Home building lots for inland lots start at $25,000 and up to $250,000 for for finished beach front lots. Condominium prices on newer projects range from $100,000 for a small one bedroom, to $400,000 for large oceanfront units.

Honduras' Northern Caribbean coast is noted for its beautiful beaches. Good real estate buys are still available. Preferred towns are Trujillo, La Ceiba, and Tela due to the beautiful beaches and infrastructure.

For assistance in buying real estate , complete the request form and include any comments or specifications of what interest you.

Land titles date back to the Spanish Crown. The  government  runs property registration called "Registro de la propiedad Hipotecas y Anotaciones Preventivas del departmento de Francisco Morazon" This is the official registry.

Currently, restrictions on the ownership of  land located in the Honduran border and coastal areas are regulated by Article 107 of the (1982) Honduran Constitution, which translated from Spanish states the following:

The land belonging to the State, the municipalities, communities or of private property located in the areas bordering other States, or in the littoral of  both seas, in an extension of 40 kilometers inland and in the islands, keys, reefs, sand banks (etc.) may only be owned possessed or had, under any title, by Hondurans by birth or by companies formed entirely by Honduran shareholders and by institutions of the state. (The infringement) of this disposition will result in the annulment of the respective act or contract.

The acquisition of urban assets located in the borderline areas indicated above will be the object of a special legislation.

It is forbidden for Property Registrars to record documents that contravene the above regulations.

The reason for the existence of this constitutional article is historic. Honduras has been at war or had border clashes with all three of its neighbors during this century (the last of them the infamous "Soccer War" in 1969).  Several thousand dead later, all of Honduras' borders have been established via international arbitration, or recently, in regard to El Salvador, by the International Court of Justice in The Hague.

The constitutional prohibition is not new.  It existed in both the 1956 and the 1965 Constitutions, as Articles 159 and 101 respectively.  Since the rights of the State do not suffer from a statute of limitations, in theory, any title awarded to a foreigner during that time could be forfeit upon the
appropriate action presented before the Honduran court system. Any Registrar who violated the Constitutional prohibition would be liable for the violation of the law. However, I know of no case such as the one I have outlined.  In fact, I have read several titles at the Roatán Property
Registry which have clearly been awarded to foreigners.

In 1990 the government of Mr. Rafael Leonardo Callejas issued Decree 90/90 which, in accordance with the second paragraph of article 107, regulated foreign ownership of urban land located in the areas regulated by article 107.  It was not necessary to amend the Constitution, as it had provided
precisely for such special regulation.  Consequently, this is the law until it is repealed or amended.

In essence, decree 90/90 authorized foreign ownership of coastal areas under two different parameters:
a) for residential purposes - foreigners are allowed to purchase up to 3000 m2 (about 3/4 of an acre) in urban areas for the purpose of building their homes, which they must complete within 36 months counted from the date of their document; or
b) for tourism purposes - foreigners may purchase as much land as they want for "previously approved" tourism projects. Other than that, there are no exceptions to the article 107 rule.

Due to the issuance of Decree 90/90 the sale of land in Roatan and other coastal for residential purposes boomed, but some people wanted more than 3000 m2, hence an adequate legal vehicle to enable them to acquire more land had to be conceived. (By the way, another decree, which I do not have so therefore cannot share, establishes that all of Roatán is considered to be urban area.)  The answer was to form Honduran stock corporations in which the original owners were Honduran who endorsed their shares over to the foreign owners and simultaneously appointed them as the sole administrator or president of the board of directors of the company. 
Although this scheme is viable and widely used, it is inherently risky in that, contrary to article 107, the corporation seems to be 100% Honduran owned, but in reality is not, and may therefore cause the annulment of the ownership title.  Of course, in order to view documented evidence of foreign
ownership, the plaintiff (presumably the Honduran State) would need to get a court order to inspect such documents.
What is the future of Constitutional Article 107?  I do not claim to know, but over the past two years, several projects have floated around.  The latest such project received widespread press coverage around the time I was introduced to this list, and contemplates another amendment which would allow tourism-related businesses to purchase as much land as they wanted. 
The President of Congress even went as far as to state that the reform would take place regardless of opposition.  This proposed reform promptly elicited opposition from the garífuna tribes in the North Coast, who fear that since most members have no titles to their lands, then the same lands can be taken away by powerful foreigners with money.  The furor has died down and all sides are currently negotiating.

Business and investment opportunities include:  Telecommunications , agricultural machinery, computers and peripherals, electric power systems, building products, hand and power tools, medical equipment, automotive parts and service equipment, food processing and packaging equipment and Real Estate .

International companies have already achieved long term success in the production of appliances, electrical products and light industrial goods. The trained work force is interested in collaborating with the foreign investor, as well as support industries that facilitate the assembling of new industrial and electrical products for export.

Many U.S. apparel manufacturers have already established plants here. Other target, non-traditional exports include light manufacturing, aqua culture, such as fish farming, and non-traditional agricultural such as melons.

The Honduran banking system is comprised of many domestically owned private banks , two foreign owned private banks, and the Public Central Bank, which controls all banking activities including the right to issue coins and bank  notes .

All banks or savings and loans are required by law to sell part of their assets to the Central Bank in gold or foreign exchange. The Central Bank then distributes the foreign currency among the other banks and institutions.

In order to improve efficiency and foster increased inter-bank competition, the  government has promoted a rapid deregulation of the financial sector. All indicators demonstrate that the country's banking system is liquid, solvent, and profitable.

All Honduran banks have corresponding relations with U.S. banks. In response to past criticisms of banks' granting excessive, unsecured loans to major stock holders or bank principals, the Central Bank proposed a new financial law to restrict this practice, as well as to give the Superintendency of banks more control over the financial system and create a deposit insurance program. Commercial banks are overwhelmingly against the new law, however, has prevented its implementation.

The 1990's have ushered in a number of bank reforms, such as the gradual deregulation of interest rates and the creation of stock exchanges in Tegucigalpa and  San Pedro Sula  that have served to raise equity through the issuance of publicly traded shares.

Due to the banks' steep 36 to 42 percent, reserve requirements, average loan rates in 1996 have hovered around 36 percent.

Honduras participates in the International Bank of Reconstruction and Development (World Bank), The International Monetary Fund (IMF), and the Central American Bank for Economic Integration (BCIE).

Foreigners may create, own and profit from  a business. The law provides them equal opportunity with public enterprises regarding market access, credit and other business considerations. Loans to private firms have been limited however by the Central Bank's high reserve requirements to finance the fiscal deficit.

All investors , foreign and domestic must be registered with the Ministry of Economy. Foreign firms are required to act through an agent to participate in local tenders. Dividends paid to foreign firms are subject to a 15 percent tax , while domestic firms only pay 10 percent. A network of Honduran professional associations strictly regulate the licensing of many professions including lawyers, doctors, and engineers.

Honduran corporations may only be created through an attorney, who will also provide the investor with the necessary legal and tax information.

It is extremely important to locate an appropriate partner in order to establish a solid base of operation. All contracts are legally binding.

Honduras' low cost of living, modest wage rate ($3.15 per day), stable government and investment incentives, offer good opportunity to the future  investor .

Potential growth exports: Textiles, apparel, wood products, and fish farming. Potential Growth Imports: Computers and peripherals, electrical equipment, automotive parts and food processing equipment and packaging.

Tourism: Some hidden opportunities exist, mainly on the northern Caribbean coast. This region's pristine beaches are now merely flown over as a tourist flies to  The Bay Islands  . This area is also close to the more popular tourist attractions, the Mayan ruins, lake Yojoa, and a couple of natural parks.

Income tax is payable on income obtained from services rendered in Honduras, including any civil or commercial activity and proceeds from any kind of real or personal property. Income tax is also payable on all exports produced in Honduras.

Resident companies and individuals are subject to income tax both from sources within the country and from foreign countries. Nonresident companies and individuals are taxed on income only from sources within the country. The tax ranges from 12 to 40 percent.

Foreign employees are subject to income tax and must file individual returns annually and upon leaving the  country . The law defines gross income to include wages, salaries, overtime, daily allowances, gratuities, reimbursements, pensions, subsidies, bonuses, and commissions.

The general rate of sales tax is 7 percent, with a 10 percent tax charged on cigarettes and liquor. Sales tax is charged to the buyer or the user on the price of the article sold or the service provided in such a way that its is applied at one stage only in the sales process.

The seller is responsible for collecting the tax and delivering it to the tax authorities. The seller must also keep a special accounting showing all daily proceeds of the tax and submit the account with the proceeds to the appropriate collection office. Certain goods, including foodstuffs, raw materials, hand made goods, books and school supplies are exempt from the sales tax.

U.S. tourist do not need a visa  to enter Honduras, however, those wishing to permanently work while in the country must supply the following information to apply for a resident visa.

1. Sworn statement declaring the individual will abide by Honduran law, denounce communism and not oppose a democratic, representative form of government .

2. A certified letter stating that the individual does not have a police record.

3. A health certificate

4. U.S. fee of $150.00

All the documents must be authenticated by the Honduran council and then are forwarded to the Ministry of foreign affairs in Tegucigalpa. Any additional procedures must be completed through an attorney.

The residency and work permit process usually takes about 3 months.

To obtain a resident status, foreigners must show that they have a permanent income from abroad of not less than $600.00 per month to qualify for retired resident status, or not less than $1000.00 per month to qualify for "rentista" status.

Names:
conventional long form: Republic of Honduras
conventional short form: Honduras
local long form: Republica de Honduras
local short form: Honduras

Digraph: HO

Type: republic

Capital: Tegucigalpa

Administrative divisions: 18 departments (departamentos, singular - departamento); Atlantida, Choluteca, Colon, Comayagua, Copan, Cortes, El Paraiso, Francisco Morazan, Gracias a Dios, Intibuca, Islas de la Bahia, La Paz, Lempira, Ocotepeque, Olancho, Santa Barbara, Valle, Yoro

Independence: 15 September 1821 (from Spain)

National holiday: Independence Day, 15 September (1821)

Constitution: 11 January 1982, effective 20 January 1982

Legal system: rooted in Roman and Spanish civil law; some influence of English common law; accepts ICJ jurisdiction, with reservations

Suffrage: 18 years of age; universal and compulsory

Executive branch:
chief of state and head of government: President Carlos Roberto REINA Idiaquez (since 27 January 1994); election last held 28 November 1993 (next to be held November 1997); results - Carlos Roberto REINA Idiaquez (PLH) 53%, Oswaldo RAMOS Soto (PNH) 41%, other 6%
cabinet: Cabinet

Legislative branch: unicameral
National Congress (Congreso Nacional): elections last held on 27 November 1993 (next to be held November 1997); results - PNH 53%, PLH 41%, PDCH 1.0%, PINU-SD 2.5%, other 2.5%; seats - (134 total) PNH 55, PLH 77, PINU-SD 2

Judicial branch: Supreme Court of Justice (Corte Suprema de Justica)

Political parties and leaders: Liberal Party (PLH), Rafael PINEDA Ponce, president; National Party of Honduras (PNH), Oswaldo RAMOS Soto, president; National Innovation and Unity Party (PINU), Olban VALLADARES, president; Christian Democratic Party (PDCH), Efrain DIAZ Arrivillaga, president

Other political or pressure groups: National Association of Honduran Campesinos (ANACH); Honduran Council of Private Enterprise (COHEP); Confederation of Honduran Workers (CTH); National Union of Campesinos (UNC); General Workers Confederation (CGT); United Federation of Honduran Workers (FUTH); Committee for the Defense of Human Rights in Honduras (CODEH); Coordinating Committee of Popular Organizations (CCOP)

Member of: BCIE, CACM, ECLAC, FAO, G-77, GATT, IADB, IBRD, ICAO, ICFTU, ICRM, IDA, IFAD, IFC, IFRCS, ILO, IMF, IMO, INTELSAT, INTERPOL, IOC, IOM, ITU, LAES, LAIA (observer), MINURSO, NAM, OAS, OPANAL, PCA, UN, UNCTAD, UNESCO, UNIDO, UPU, WCL, WFTU, WHO, WIPO, WMO

Diplomatic representation in US:
chief of mission: Ambassador Roberto FLORES Bermudez
chancery: 3007 Tilden Street NW, Washington, DC 20008
telephone: [1] (202) 966-7702, 2604, 5008, 4596
FAX: [1] (202) 966-9751
consulate(s) general: Chicago, Houston, Los Angeles, Miami, New Orleans, New York, San Francisco, and San Juan (Puerto Rico)
consulate(s): Boston, Detroit, and Jacksonville

US diplomatic representation:
chief of mission: Ambassador William T. PRYCE
embassy: Avenida La Paz, Apartado Postal No 3453, Tegucigalpa
mailing address: American Embassy, APO AA 34022, Tegucigalpa
telephone: [504] 36-9320, 38-5114
FAX: [504] 36-9037  

Overview: Honduras is one of the poorest countries in the Western Hemisphere. Agriculture, the most important sector of the economy, accounts for 28% of GDP, employs 62% of the labor force, and produces two-thirds of exports. Productivity remains low. Manufacturing, still in its early stages, employs 9% of the labor force, accounts for 15% of GDP, and generates 20% of exports. The service sectors, including public administration, account for 50% of GDP and employ 20% of the labor force. Many basic problems face the economy, including rapid population growth, high unemployment, inflation, a lack of basic services, a large and inefficient public sector, and the dependence of the export sector mostly on coffee and bananas, which are subject to sharp price fluctuations. A far-reaching reform program, initiated by former President CALLEJAS in 1990 and scaled back by President REINA, is beginning to take hold.

National product: GDP - purchasing power parity - $9.7 billion (1994 est.)

National product real growth rate: -1.9% (1994 est.)

National product per capita: $1,820 (1994 est.)

Inflation rate (consumer prices): 30% (1994 est.)

Unemployment rate: 10%; underemployed 30%-40% (1992)

Budget:
revenues: $527 million
expenditures: $668 million, including capital expenditures of $166 million (1993 est.)

Exports: $850 million (f.o.b., 1993 est)
commodities: bananas, coffee, shrimp, lobster, minerals, meat, lumber
partners: US 53%, Germany 11%, Belgium 8%, UK 5%

Imports: $990 million (c.i.f. 1994 est
commodities: machinery and transport equipment, chemical products, manufactured goods, fuel and oil, foodstuffs
partners: US 50%, Mexico 8%, Guatemala 6%

External debt: $4 billion (1994 est.)

Industrial production: growth rate 10% (1992 est.); accounts for 22% of GDP

Electricity:
capacity: 290,000 kW
production: 2.3 billion kWh
consumption per capita: 445 kWh (1993)

Industries: agricultural processing (sugar and coffee), textiles, clothing, wood products

Agriculture: most important sector, accounting for 28% of GDP, more than 60% of the labor force, and two-thirds of exports; principal products include bananas, coffee, timber, beef, citrus fruit, shrimp; importer of wheat

Illicit drugs: transshipment point for narcotics; illicit producer of cannabis, cultivated on small plots and used principally for local consumption

Economic aid:
recipient: US commitments, including Ex-Im (FY70-89), $1.4 billion; Western (non-US) countries, ODA and OOF bilateral commitments (1970-89), $1.1 billion

Currency: 1 lempira (L) = 100 centavos

Exchange rates: lempiras (L) per US$1 - 9.1283 (October 1994), 7.2600 (1993), 5.8300 (1992), 5.4000 (1991); 2.0000 (fixed rate until 1991) 5.70 parallel black-market rate (November 1990); the lempira was allowed to float in 1992

Fiscal year: calendar year

Railroads: total: 785 km
narrow gauge: 508 km 1.067-m gauge; 277 km 0.914-m gauge

Highways: total: 8,950 km
paved: 1,700 km
unpaved: otherwise improved 5,000 km; unimproved earth 2,250 km

Inland waterways: 465 km navigable by small craft

Ports: La Ceiba, Puerto Castilla, Puerto Cortes, San Lorenzo, Tela, Puerto Lempira

Merchant marine:
total: 271 ships (1,000 GRT or over) totaling 802,990 GRT/1,210,553 DWT
ships by type: bulk 31, cargo 171, chemical tanker 1, combination bulk 1, container 6, liquefied gas tanker 2, livestock carrier 3, oil tanker 21, passenger 2, passenger-cargo 3, refrigerated cargo 19, roll-on/roll-off cargo 7, short-sea passenger 2, specialized tanker 1, vehicle carrier 1
note: a flag of convenience registry; Russia owns 14 ships, Vietnam 7, North Korea 4, US 3, Hong Kong 2, South Korea 2, Greece 1

Airports: total: 159
with paved runways 2,438 to 3,047 m: 3
with paved runways 1,524 to 2,437 m: 2
with paved runways 914 to 1,523 m: 4
with paved runways under 914 m: 118
with unpaved runways 2,438 to 3,047 m: 1
with unpaved runways 1,524 to 2,438 m: 4
with unpaved runways 914 to 1,523 m: 27
 

Telephone system: NA telephones; 7 telephones/1,000 persons; inadequate system
local: NA
intercity: NA
international: 2 INTELSAT (Atlantic Ocean) earth stations and the Central American microwave radio relay system

Radio:
broadcast stations: AM 176, FM 0, shortwave 7
radios: NA

Television:
broadcast stations: 28

Branches: Army, Navy (includes Marines), Air Force, Public Security Forces (FUSEP)

Manpower availability: males age 15-49 1,275,670; males fit for military service 760,113; males reach military age (18) annually 62,405 (1995 est.)

Defense expenditures: exchange rate conversion - $41 million, about 0.4% of GDP (1994)

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