First of all, I’m going to preface this post to say that “I am not an attorney, nor an accountant, and you should consult a professional for further information”. What I write below is what my real estate broker brain understands, about something that is obviously so much more complicated than what I will summarize.
This is my brief summary of why you need to contact your professional, and who are the people that should take advantage of the amnesty today.
The laws always change and this is one that will affect you if any statement below applies to your Corporation with respect to SAR (Servicio de Administración de Rentas – Rent Administration Services). The name doesn’t really translate correctly. This is the Honduran government’s tax department, like the IRS in the USA. This organization was formerly known as the DEI – La Dirección Ejecutiva de Ingresos (The Executive Directorate of Income). However back in about March 2016, the government changed the name, hopefully to rid itself of the negative connotation of the former administration. Although it’s my understanding that is was headed by the same person, just under a new name.
So the new situation may apply to you, if:
- You created a corporation to purchase a Utila real estate asset
- You have not paid annual taxes on the corporation (this is not your annual property tax that you pay to the Utila Municipality)
And I believe it applies to:
- Foreign-owned and Honduran corporations
What do you have to do if you haven’t ever filed your Corporate taxes? Well, you could go to a SAR office (there’s one in La Ceiba and Roatan) and try to figure out what the status is of your Corporation. You’ll need to speak spanish and most likely they will ask for your individual RTN Card (Registro Tributario Nacional Numerico – National Tax Registry Number), and your Corporate RTN card. What is that you ask?
Do you remember when you purchased your property in Utila? You should have obtained an RTN card for the purchase or sale of the real estate asset. You may not have required an RTN card if your property was purchased a few years ago. However, it’s a requirement now.
One of the first requirements with SAR and figuring out your Corporate status will be that you, individually, AND your corporation both have an RTN card. If you didn’t get one when you purchased your Utila property, you can get your RTN card yourself at any SAR office.
This newspaper article in El Tiempo (yes it’s in Spanish – use Google Translate) describes how to get your RTN card. It is FREE! However, you will need to wait at the office, speak spanish, pay for the ferry over and back, and taxi rides, etc., provide a public receipt with your name and Utila address on it and a copy of your passport. If it’s for your corporation, you’ll need to present your original Corporation Constitution, have a copy to leave them, photocopies of your Corporate RTN, your individual RTN, or that of the legal representative of the Corporation, or a Special Power of Attorney for the legal representative, and an original copy of a public receipt showing the address and name of the corporation. OR, you can often pay an attorney $100-$150 to get your RTN. What do you think is easier?
After you have all that straight, and you have your RTN cards, then you can approach SAR to figure out what your status is, and what you owe. I believe you will still need to pay the back taxes on the Corporation, however, I believe the amnesty applies to any fines owing since the inception of your Corporation. Note that the amnesty expires July 24, 2019!
OR, instead of trying to deal with SAR, you can do what I’m doing. I’m paying a professional to sort it out for me. I haven’t got a quote yet, but as stated above, you can see how much work it is to sort out. I think a simple Corporation with RTNs in place should probably cost about $400 to sort everything out, not including the taxes. Then again, I’m not an attorney, nor an accountant, so I cannot say for sure. Obviously everything is on a case-by-case basis.
We have three corporations that have never paid taxes, and we created them for the sole purpose of purchasing our Utila real estate assets. Email me at RealEstateInUtila@gmail.com with the subject line: SAR Corporate Tax Help, if you want a recommendation on a great tax attorney who will sort you out before the amnesty is up!