Honduras

Dentons has advised Bank Gospodarstwa Krajowego (BGK), the Polish development bank, on a long-term investment loan of up to US$60 million granted to the Molo Group, owned by the Slominski family. The financing will be used to build a hotel complex with 251 rooms and suites on Providenciales, the main island of the Turks and Caicos archipelago in the Caribbean. The buildings will be constructed from equipment and modules manufactured in Poland. “It has been a great pleasure and satisfaction to assist BGK with this prestigious financing transaction, supporting the expansion of Molo Group in their largest investment to date. This project not only promotes Polish exports but also features exceptional hotel developments in some of the most stunning locations in the Caribbean”, said Tomasz Zwoliński, partner in the Banking and Finance practice in Warsaw. The complex includes two modular hotels: the 4-star boutique Indigo hotel and the 5-star Kimpton hotel. Both brands are owned by the international IHG group. The Indigo hotel is scheduled for completion by the end of 2025, while the Kimpton is scheduled for completion in the first half of 2027. Tomasz Zwoliński supervised and led the cross-border project, advising on English and Polish law matters related to preparing, negotiating and signing the finance documents and securities, which covered five jurisdictions and involved collateral and mechanisms related to hurricane risk. He was supported by Jakub Zienkiewicz (counsel) and Kamil Bator (associate) from the Banking and Finance team in Warsaw. The transaction team also included partner Babette Märzheuser-Wood, Global Head of the Franchise Group, and Agnieszka Nagórska-Kordeczka (counsel), who advised on hotel franchise agreements. Dentons worked alongside teams from Griffiths & Partners, who served as Turks and Caicos counsel, and Massiah Law, acting as Gibraltar law counsel, both members of the Nextlaw referral network. About Dentons Across over 80 countries, Dentons helps you grow, protect, operate and finance your organization by providing uniquely global and deeply local legal solutions. Polycentric, purpose-driven and committed to inclusion, diversity, equity and sustainability, we focus on what matters most to you. dentons.com Media contact Lidia Adamczyk Communications, Marketing & Business Development Manager +48 513 045 352 [email protected]

FROM UNCERTAINTY TO REGULATION: HONDURAS ENACTS PART-TIME EMPLOYMENT LAW Honduras closed the first quarter of 2026 with two labor law developments of immediate consequence for any company with active personnel: the enactment of a comprehensive statute governing part-time employment, and a minimum wage adjustment agreed upon unanimously by workers, employers, and the government. While these are distinct instruments, they converge on a single message for Honduran employers: the legal framework has changed, and continuing to operate under structures designed for a regulatory regime that no longer exists carries concrete and costly consequences. Enactment of the Part-Time Employment Law (Legislative Decree No. 45-2026) To appreciate the scope of this statute, it is useful to recall the context. The former Hourly Employment Law was repealed in 2022 by Decree No. 38-2022, precisely because it had become a vehicle for labor precariousness: workers were dismissed from permanent positions and rehired under temporary arrangements, working hours went uncapped, and labor rights were systematically circumvented. From that repeal through March 2026, Honduras operated without any specific regime governing reduced working hours. That four-year regulatory gap is what the new Part-Time Employment Law has been enacted to fill. The pertinent question for any company that may have operated under similar arrangements during that period is not whether the new law applies to them — it is what accumulated exposure they incurred during the years when no specific rule protected them. Under this new legal framework, part-time employment is defined as any arrangement involving between 18 and 32 hours per week. Within that range, the employer and employee retain flexibility to distribute schedules according to business needs and the individual's availability. What the statute makes unambiguously clear — and what many companies have yet to internalize — is that such flexibility cannot translate into permanent availability or unpacted exclusivity. A part-time worker is entitled to hold concurrent employment elsewhere, unless the parties have expressly agreed otherwise in writing. If a company is currently requiring exclusivity without a written agreement to that effect, it is already in violation of the law. On compensation, the governing principle is proportionality: the hourly rate may not fall below the value derived from the applicable minimum wage schedule for the relevant economic sector. Statutory benefits — the thirteenth-month salary, fourteenth-month salary, and vacation pay — are calculated under the same proportional logic. These obligations are neither optional nor subject to contractual derogation. Any agreement between employer and employee establishing an hourly rate below the proportional minimum is void as a matter of law, and unprescribed wage differentials may be claimed retroactively. One of the statute's most significant — and most underappreciated — features is its express prohibition of practices that were historically used to disguise full-time working relationships as reduced-hour arrangements. These are not minor infractions. The law specifically classifies the following as prohibited conduct: artificially splitting a single full-time position across multiple part-time contracts to evade statutory benefits; rotating workers among entities within the same corporate group in order to interrupt employment continuity and avoid conversion to full-time status; and requiring an employee's effective dedication to be equivalent to full-time work, regardless of what the contract states. Such practices do not merely invalidate the part-time contract — they expose the employer to administrative sanctions, to retroactive payment of all benefits as if the relationship had been full-time from inception, and to the burden of demonstrating — before the Ministry of Labor or a court — that the contract was not what it appeared to be. Furthermore, the statute provides that if a part-time worker averages more than 32 hours per week over three consecutive months, that contract automatically converts to full-time. The burden of proving that no such conversion occurred rests with the employer, not the worker. In practical terms: if a company does not maintain attendance records documenting the actual hours worked by each part-time employee, it is already at an evidentiary disadvantage in any resulting claim. For any of this to function in practice — or for an employer to mount any meaningful defense when it does not — the statute requires that contracts be executed in writing before the worker commences employment, and that they be registered with the Ministry of Labor and Social Security within the first thirty days, or within fifteen days for contracts of shorter duration. This is not a low-risk administrative formality. In the absence of a written contract or timely registration, the law presumes the employment relationship to be full-time and of indefinite term. That presumption arises by operation of law, requiring no additional evidence from the claimant to pursue a claim on that basis. An employer that fails to meet registration deadlines has, through omission alone, created an employment relationship carrying a greater benefits burden than the one it originally intended to establish. History Repeating: Why This Law Cannot Be Used as the Previous One Was The Hourly Employment Law was not repealed because it went unused. It was repealed precisely because many companies did use it — but not for the purposes for which it was designed. It became an instrument for reducing labor costs while maintaining workloads equivalent to those of permanent employees: chained part-time contracts, rotation among related entities to interrupt continuity, and positions that on paper carried 20-hour schedules but in practice demanded 40. The legislature repealed that law because such abuses had become systemic. The new Part-Time Employment Law was drafted with that precedent in mind, and this is reflected in a series of express prohibitions and legal presumptions that shift the evidentiary burden to the employer. The direct question for any company considering part-time contracts under this new statute is: are they genuinely designed to meet a reduced-hour operational need, or are they a response to a full-time need that the company wishes to compensate at part-time cost? The law does not prohibit part-time contracts. It prohibits — with concrete financial consequences — part-time contracts that conceal something else. It bears emphasis that between 2022 and 2026, no special regime existed to support reduced-hour employment contracts. Any employment relationship structured under hourly-employment logic during that period was subject to the general Labor Code, with all of the worker-favoring presumptions that entails. The new law does not rehabilitate those practices: it regulates part-time work from the ground up, with more demanding requirements. Identifying whether accumulated exposure exists from that period is today as urgent as understanding the new regulatory framework itself. Approval of the Minimum Wage Concurrently, on April 29th, 2026, Agreement SETRASS-233-2026 was published, establishing differentiated minimum wage adjustments for 2026 and 2027 based on company size: companies with up to 50 workers will see a 6% increase in each year; those with 51 to 150 workers, a 7% increase in each period; and those with 151 or more workers, a 7% adjustment for 2026 and 7.5% for 2027. These percentages take effect on January 1 of each negotiated year. There is one date no company can afford to overlook: the retroactive adjustment corresponding to the January–April 2026 period must be paid no later than July 31 of this year. Any employer that has not provisioned for this difference — or has not properly calculated its impact on payroll, proportional benefits, and active part-time contracts — has fewer than three months to correct the situation before falling into arrears. The agreement also incorporates a safeguard clause: if inflation at the close of 2026 exceeds the percentage agreed for 2027, that year's adjustment automatically rises to match the inflation index. This means that the 2027 payroll budget carries a variable component dependent on data that does not yet exist. Finally, the textile maquila sector and companies operating under free trade zone regimes are excluded from this agreement and continue to be governed by the arrangements reached in 2024. What Your Company Must Review Before July 31 The combined effect of these two measures is not merely a regulatory update: it is a defined time window within which companies must come into compliance before non-compliance becomes costly. There are concrete questions that any human resources manager or legal advisor should be addressing right now. Does your company have active part-time contracts that were not registered within the statutory deadline? If so, those relationships are already being treated by operation of law as full-time, indefinite-term contracts. Are there workers who on paper hold part-time schedules but whose actual attendance consistently exceeds 32 hours per week? If that has been the case for more than three months, automatic conversion has already occurred — regardless of what the contract provides. Are there reduced-hour contracts that were structured between 2022 and 2026, during the period when no special regime supported them? That exposure does not disappear under the new law: it remains live and subject to the general Labor Code. And finally: has the retroactive minimum wage adjustment already been calculated against your current payroll, including active part-time contracts? The payment deadline is July 31. There is no extension. At Baker Tilly Honduras, we assist our clients in reviewing

Current corporate tax framework Honduras’ corporate tax policy is not being reinvented, but adjusted within an established incentive-based framework. Despite recent reform debates and administrative transitions, the country continues to rely on sector-specific regimes as core tools of industrial and economic policy. In its first months in office, the current administration has signalled continuity within the existing framework rather than structural overhaul. Recent measures include a three-month tax amnesty package under Executive Decree No. 7-2026, the extension of the Temporary Import Regime under Executive Decree 2-2026, the continued operation of Tax Free Zones, and renewed steps toward re-engagement with international arbitration mechanisms in order to provide stability for investors. These initiatives suggest an effort to stabilize the existing tax structure as the new administration addresses past challenges before attempting to define a longer-term regulatory direction. The proposed Law on Tax Justice (Ley de Justicia Tributaria) became a central reference point in Honduras’ recent tax policy debate. Although it was not approved, the proposal significantly shaped the political and fiscal climate surrounding exemptions and special regimes, influencing investor perception of their durability. The continuity of special regimes has long formed part of Honduras’ policy discussion. The ongoing ICSID arbitration concerning the Próspera ZEDE regime (ICSID Case No. ARB/23/2) further underscores how changes to incentive frameworks can generate international dispute exposure. The resolution of that case may influence how future incentive frameworks are approached, particularly in the context of balancing fiscal policy with investment protection. In Honduras, reform volatility is not something new. Part of the country’s legislative tradition has long been shaped by political transitions. The present moment, and the tax outlook for 2026, should therefore be understood not as a dramatic break from the past, but as an early stage in which consistency of enforcement and clarity of direction will determine how the market interprets the government’s approach. Reform Debate and Incentive Stability The effort to approve a new Law on Tax Justice marked a period in which exemptions and special regimes were publicly debated at a structural level. Even without legislative approval, the proposal brought the durability of incentive frameworks into sharper focus. The debate over tax incentives led investors to evaluate the substance of potential reform, but also the possibility that long-standing regimes could be reconsidered or restructured. Although the reform did not pass, the debate shifted the tone of the fiscal discussion. Special regimes that had historically been treated as established components of the tax system became subject to policy review. This shift alone influenced how both domestic and foreign investors assessed regulatory risk. At the administrative level, last year a new body of legislation was brought forth under Agreement No. 143-2025, which establishes a manual of procedures for the control, verification, and supervision of tax exonerations, this new control mechanism introduced a more formalized review structure for companies operating under special regimes. The regulation strengthens oversight, increases documentation requirements, and clarifies compliance expectations for incentive beneficiaries, with the ability to fine, suspend and even terminate special incentives not managed properly by taxpayers. Enhanced supervision can reinforce fiscal discipline and transparency. However, long-term stability and consistency in a country depends not only on stronger controls but on uniform application. Oversight that varies significantly across sectors or regions may generate uncertainty rather than confidence for investors. A significant example can be studied under the Próspera ZEDE arbitration (ICSID Case No. ARB/23/2), a ZEDE (Zone for Economic Development) established by Honduran law as a special economic jurisdiction with broad autonomy over certain administrative, regulatory, and fiscal matters within its geographic boundaries on the Bay Islands.From a tax perspective, Próspera was designed to offer distinctive and investor-friendly tax terms compared with the standard Honduran regime. The concept was to create a regulatory and fiscal environment with international-style certainty, aimed at attracting foreign direct investment into sectors such as tourism, services, technology, logistics, and specialized manufacturing. The level of autonomy granted under the ZEDE framework generated significant domestic debateac. Although this is still a matter in dispute, it reinforces the connection between domestic incentive policy and international dispute mechanisms. While the case concerns a specific regulatory framework that can be subjected to debating not just tax policy but constitutional sovereignty, this case illustrates how modifications to special regimes can extend beyond domestic legislative debate and enter the sphere of treaty-based protection. Together, these developments created a period in which the durability of special regimes was and still is actively questioned. That period now forms the backdrop against which current measures are being evaluated. A new administration, a new adjustment An important structural difference for the upcoming tax outlook is the change in administrative posture under the current government, political influence aside, early measures under the current administration suggest incremental adjustment rather than comprehensive reform. An example of these new adjustments, come into form under the Executive Decree 2-2026 which extended the Temporary Import Regime (Régimen de Importación Temporal – RIT), a customs and tax regime designed for export-oriented industries. It permits the temporary importation of raw materials, intermediate goods, machinery, and equipment without payment of customs duties and certain internal taxes, on the condition that the imported inputs are incorporated into goods that are subsequently exported. The regime functions as a suspension of duties rather than a blanket exemption and requires compliance with reporting, inventory, and export verification procedures. The Temporary Import Regime plays a central role in Honduras’ export model. Industries such as textiles, agro-industrial processing, and manufacturing rely heavily on customs suspensions and defined tax relief periods to remain competitive. The extension of this regime therefore preserves a key structural component of the country’s fiscal architecture. By reinforcing one of Honduras’ principal industrial incentive mechanisms, tax policy seeks to extend planning visibility for export-oriented industries that rely on customs suspension and related tax benefits. Maintaining this framework signals continuity within the established incentive structure. Another initial reform, Executive Decree No. 7-2026 introduced a temporary amnesty program applicable to outstanding municipal, energy, vehicle, telecommunications, water, tax, and migration-related obligations. The measure primarily functions as a compliance and liquidity mechanism, allowing taxpayers to regularize accumulated liabilities. While it does not alter the corporate tax system, it reflects an effort to stabilize administrative relations while addressing prior enforcement backlogs. In parallel, renewed steps toward re-engagement with the International Centre for Settlement of Investment Disputes (ICSID) contribute to institutional signalling. Participation in recognized international arbitration frameworks may support perceptions of legal stability, particularly following recent dispute exposures involving special regimes. Taken together, these measures indicate a preference for maintaining and managing the existing incentive-based structure rather than redesigning it, signalling how investors in Honduras navigates policy adjustments. What will determine stability for investments The central issue for investors is whether Honduras can deliver stability after a period in which tax reform proposals, administrative changes, and international disputes placed the durability of special regimes and pre-existing tax framework under scrutiny. A look at the administrative stability framework Investors evaluate how tax rules are applied in practice. Stability requires consistent interpretation across regional tax offices and predictable audit procedures. Regional administrative variation remains a relevant factor when advising international clients. Although tax legislation applies uniformly across the country, audit decisions and review timelines often reflect geographic realities for investors. Practitioners frequently experience more concise response times in cities like San Pedro Sula, where manufacturing and economic growth is concentrated, while case saturation in the capital city Tegucigalpa—where most central bureaucratic offices are located—can result in longer processing periods that tend to translate with increase legal and administrative fees. Tourism-heavy regions present additional and unusual dynamics, a clear example is the Bay Islands in the Caribbean part of Honduras, where a special regime known as The Zona Libre Turística de Islas de la Bahía (Legislative Decree No. 113-2007) or “ZOLITUR” grants broad tax incentives, yet institutional outreach in those areas has historically been limited. From a tax standpoint, ZOLITUR was designed to stimulate investment in tourism, real estate development, hospitality, and related service industries through a package of fiscal incentives that differ from the standard national tax framework, this type of tax coverage in a tourism dependent region, englobes investments of all different sectors that will inevitably correlate with tourism as a driving factor for obtaining tax incentives. The inauguration of a dedicated government tax agency presence in the Bay Islands as recently as 2023 reflects efforts to address that potential imbalance in this tourism centric area, although administrative capacity remains in development this Regime and its durability will certainly be put to the test in the overall benefits concerning its renewal once the Regime subsides for most investors given no more companies can adhere to this special Regime. A clear example of our tax frameworks evolution can be studied with the digital modernization introduced through the Virtual Office platform under the prior administration in 2024, aimed at creating progress in tax management and notification systems for all taxpayers and the administration. In practice, however, in-person procedures often remain the most effective method for resolving audits and mitigating risk. The coexistence of digital and physical processes has required practitioners to adapt without yet delivering a fully streamlined experience. While digital tools have strengthened oversight capacity, official data regarding measurable increases in audit activity or enforcement intensity remains limited. The tax administrations stability will depend not only on technology framework but on the consistent administrative practice across regions and sectors. Can we rely on incentives to continue existing? Honduras continues to rely on sector-specific regimes as core components of its tax structure. Free Trade Zones provide exemptions from municipal taxes and corporate income taxes within statutory limits, as well as customs-related benefits. The Temporary Import Regime offers suspension of customs duties and defined tax relief periods. Tourism incentives under the Tourism Incentive Law continue to apply to qualifying projects authorized before 2014. Call center and BPO operations benefit from income tax exemptions on incentivized revenues and duty exemptions for equipment. The Bay Islands Free Tourist Zone maintains broad exemptions subject to statutory time limits and initial filings. Mining and renewable energy sectors operate under distinct fiscal frameworks combining sector-specific levies with targeted incentives. Honduras maintains a historical trade deficit, and exports such as coffee, textiles, and palm oil remain primary contributors to national production. Tax incentives have traditionally aligned with export-oriented and manufacturing sectors, making the Temporary Import Regime a central feature of the country’s fiscal structure. The extension of Executive Decree 2-2026 the Temporary Import Regime for an additional five fiscal years represented a significant policy decision; it signals continuity of necessary incentives for companies to remain competitive and maintain foreign and national investment. For companies operating under RIT or related export frameworks, this extension provides medium-term visibility within an evolving policy environment, in jurisdictions where regulatory shifts have occurred, tax consistency becomes a significant factor in investment planning. Although tax incentives have remained necessary for our economic framework, special enforcement legislative mechanisms like Agreement No. 143-2025 provide a clear balance of tax freedom with oversight, formalizing supervisory procedures over tax exonerations and reinforcing compliance requirements. While stronger controls may enhance fiscal discipline, stability requires that enforcement remain proportionate and predictable. The Próspera ZEDE arbitration (ICSID Case No. ARB/23/2) underscores how modifications to special frameworks can carry international implications. Stability of incentive regimes depends not only on their statutory existence, but on how consistently they are administered over time. Where are we heading Current measures suggest that Honduras is not pursuing immediate structural reform. Instead, the approach maintains the existing incentive architecture while addressing administrative and fiscal adjustments within that system. Honduras’ corporate tax policy is not being fundamentally restructured. It is being managed within an established incentive-based framework following a period of heightened reform debate and dispute exposure. Extensions of key regimes, targeted fiscal relief measures, and renewed engagement with international arbitration mechanisms indicate an effort to stabilize the current structure rather than replace it. Enhanced supervision of incentive beneficiaries reflects ongoing fiscal discipline within that model. Over time, consistent administrative behaviour will matter more than individual policies and law. In a period of institutional transition, Honduras remains active in offering sector-specific incentives across manufacturing, export industries, tourism, BPO services, mining, renewable energy, and special economic zones. The existence of these regimes is not in question. The central issue is how consistently they are applied and how predictably they are administered. In a legislative environment where reform volatility forms part of our institutional tradition, long-term confidence will depend less on new announcements and more on sustained administrative practice. Stability will ultimately be demonstrated through consistent enforcement, institutional continuity, and transparent application of the existing policy framework.