Legal market overview
In 2013, investment activity in Honduras was slow and reserved amid political uncertainty over the outcome of November’s presidential election. However, with the ruling centre-right National Party’s Juan Orlando Hernández emerging victorious, business activity has resumed upon expectation that the market liberalisation of recent years is likely to continue. In fact, soon after his investiture, Hernández re-launched his central project of ‘charter cities’ – special development zones (SDZ), in which business-friendly tax regimes and lighter-touch regulations will apply. Hernández, who as President of Congress between 2010 and 2013 had clashed with the Supreme Court (which ruled SDZs unconstitutional), is confident that the amended bill will this time survive constitutional challenges – a view shared by most observers of legal profession.
In the foreseeable future, increased investment opportunities are most likely to be seen in the energy sector. In its last act, the previous Congress passed a law mandating the semi-privatisation of energy provider, ENEE. In addition to breaking up the monopoly into three state-owned companies, responsible for generation, transmission and distribution respectively, private companies will be allowed to develop competing transmission and distribution systems. The ENEE privatisation is, however, not the only development that might bring new activity to the energy sector: a new mining law will path the way for hundreds of new mining concessions, factually ending a moratorium that had been in place since 2006. Concurrently, the government is continuing to promote the expansion of renewable energy sources.
The legislative developments with the most profound impact, however, are to be found in the tax sector where an array of changes have been implemented, slowing recovery in the first quarter of 2014 according to many commentators. Under the new regime, all customs duty exemptions have been cancelled, a sales tax has been implemented and taxes on telephone, cable and television services have increased. Furthermore, foreign companies will incur a 10% tax on gross income and property owners also face higher taxes.
By and large, however, the corporate sector is looking to the future with optimism as regards business activity in Honduras. With respect to the legal market, there have been no major changes. Regional firms such as Aguilar Castillo Love, Arias & Muñoz and Consortium – Centro América Abogados continue to dominate the market, although challenged by highly professional local players, including López Rodezno & Asociados and Bufete Gutiérrez Falla & Asociados. Lexincorp is celebrating its comeback in Honduras, following the incorporation of four new partners. Furthermore, the market has seen the birth of a new regional network, LatAm Lex, of which banking boutique Matamoros Batson & Asociados is the local member. In intellectual property, the market remains stable with traditional boutiques enjoying the greatest reputation, although full-service firms such as García & Bodán appear to be expanding their presence in this practice area. In dispute resolution, on the other hand, there are just a handful of dedicated firms, among them key boutique Bufete Forlar Abogados.