7. INVESTORS GUIDE HN - LEGAL ASPECTS AND INCENTIVES

INVESTOR'S GUIDE HONDURAS 2020 - 2021

7

LEGAL ASPECTS AND INCENTIVES

CONTENT

7.1 7.2 7.3 7.4 7.5 7.6

HONDURAN INSTITUTE FORMIGRATION HONDURAN SOCIAL SECURITY INSTITUTE (IHSS) NATIONAL INSTITUTE FOR PROFESSIONAL TRAINING (INFOP) PRIVATE CONTRIBUTIONS REGIME (RAP) MINISTRYOF LABOR AND SOCIAL SECURITY (STSS) INCENTIVE REGIMES FOR EMPLOYMENT GENERATION

7. LEGAL ASPECTS AND INCENTIVES

INVESTOR'S GUIDE HONDURAS 2020 - 2021

j. A copy of the current operation permit, authenticated by a notary public. k. Certification from the Revenue Administration Service (SAR), of having started operations and the activity of the commercial establishment. l. Profit/loss statements and balance sheets authorized by a chartered accountant, with the corresponding stamps and professional seal. m. Payment of the corresponding special stay permit fee for each year: One Hundred American Dollars (US$100.00) per person. n. Payment of the corresponding fee for certificates, certifications or statements: Two Hundred Lempiras (L. 200.00). o. Sketch map and photograph of the commercial establishment *All the documents from abroad must be duly legalized. Those authorized in a foreign language must be officially translated by the Ministry of Foreign Affairs or the consulates of Honduras. SPECIAL STAY PERMIT FOR FOREIGNERS EMPLOYED BY CONTRACT The authorization granted by the National Institute of Migration, to foreigners hired as temporary employees by a natural person or legal entity. Who performs the procedure? The Legal Proxy Where Is It Done? The National Institute of Migration Cost: US$100 per year + L. 200.00 for the certification Average Time: 30 business days

7. 1 HONDURAN INSTITUTE FOR MIGRATION The purpose of this Law is to regulate the State’s migration policy, the entry and exit of nationals and foreigners, the latter’s stay in Honduran territory, and the issuance of migration documents. 7.1.1 SPECIAL STAY PERMIT FOR BUSINESSPERSON The National Institute of Migration indicates that foreigners applying for a special permit in the category of businessmen, on the basis of the provisions of article 39 of the Law for Migration and Foreign Affairs; and articles 42, 43, 69, 70 and 127 of the Regulations of the same Law, must meet the following requirements: Who performs the procedure? The Legal Proxy Where Is It Done? The National Institute of Migration Cost: US$100 per year + L. 200.00 for the certification Average Time: 30 business days REQUIREMENTS: a. Each petitioner must submit a request to the Head of the National Institute for Migration. The request must contain an address and telephone number of the foreigner and of the Legal Representative. b. Stamps required by law duly cancelled and adhered to the application. c. Authenticated Power of Attorney containing Legal proxy general information, the powers with which she/he is invested, address, phone, fax number and e-mail. d. The applicant and each relative will present a recent photograph (six (6) centimetres tall by five (5) centimetres wide) taken from the front. The name of each person must be indicated on the back of the photograph. e. Certificate of the criminal record of the country of origin and country of last residence, duly authenticated. f. If older than eighteen (18) years, original certification issued by the Investigation Police Directorate (DPI, for its acronym in Spanish) of not having complaints against or criminal record. g. Medical certification not older than six (6) months from the date of submission of the application. h. A copy of passport, duly authenticated i. A copy of the Declaration as a Merchant, or the company´s Articles of Incorporation, duly authenticated.

7. LEGAL ASPECTS AND INCENTIVES

INVESTOR'S GUIDE HONDURAS 2020 - 2021

REQUIREMENTS a. Each petitioner must submit a request to the Head of the National Institute for Migration. The request must contain an address and telephone number of the foreigner and the Legal proxy. b. Stamps required by law duly cancelled adhered to application. c. Provide in the application, the address and telephone number of the petioner. d. Authenticated Power of Attorney containing the general information of the Legal proxy, the powers with which she/he is invested, address, phone, fax number and e-mail. e. The applicant and each relative shall present a recent photograph [six (6) centimetres tall by five (5) centimetres wide] taken from the front. Write name of each on back of the photograph, as appropriate. f. Certificate of the criminal record of the country of origin and country of last residence, duly authenticated, where applicable. g. Original certification issued by the Investigation Police Directorate (DPI, for its acronym in Spanish) of not having complaints against or criminal record. h. Medical certification not older than six (6) months from the date of submission of the application. i. A copy of passport, duly authenticated j. Any other information or document required by the Directorate-General for Migration and Foreign Affairs. k. Employment contract issued by the private company hiring the foreign worker with the signatures duly authenticated by a notary public. l. Certification issued by the employer declaring responsibility for the sustenance of the foreign worker during stay, for departure from the country at the expiration of the permit, and notifying the National Institute of Migration of the termination of the employment relationship. m. Certification issued by the Ministry of Labor and Social Security, stating that the employer complies with Article 137 of the Constitution of the Republic, and Article 11 of the Labor Code with respect to foreign workers. n. Accreditation of foreign educational or vocational or technical training institutions, duly authenticated, that the applicant has the capacity and knowledge of the work to be performed (diplomas or certificates). o. A copy of the Declaration as a Merchant, or the company Articles of Incorporation, duly authenticated.

7. LEGAL ASPECTS AND INCENTIVES

INVESTOR'S GUIDE HONDURAS 2020 - 2021

d. Authenticated Power of Attorney containing the general information of the Legal proxy, the powers with which she/he is invested, address, phone, fax number and e-mail e. The applicant and each of his relatives shall present a recent photograph [six (6) centimetres tall by five (5) centimetres wide] taken from the front. Write name of each on back of the photograph, as appropriate. f. Certificate of the criminal record of the country of origin and country of last residence, duly authenticated, where applicable. g. If over 18 years old, original certification issued by the Investigation Police Directorate (DPI, for its acronym in Spanish) of not having complaints against or criminal record. h. Medical certification not older than six (6) months from the date of submission of the application. i. Copy of passport, duly authenticated j. Any other information or document required by the Directorate-General for Migration and Foreign Affairs. k. Certification issued by the employer declaring responsability for the sustenance of the foreign worker during stay, and departure of the country at the expiration of the permit. l. Proof of marriage or De Facto union by means of a certified document; m. Proof of kinship by means of an authenticated document. n. Evidence of dependency of older children by means of authenticated document. o. Proof of financial solvency of the foreigner who enjoys the special stay permit. p. Payment of the corresponding special stay permit fee for each year: One Hundred American Dollars (US$100.00) per person. q. Payment of the corresponding fee for certificates, certifications or statements: Two Hundred Lempiras (L. 200.00). *All documents coming from abroad must be presented duly legalized and those authorized in foreign language officially translated by the Ministry of Foreign Affairs and International Cooperation or the Consulate of Honduras.

p. A copy of the current operation permit, authenticated by a notary public. q. Certification from the Revenue Administration Service (SAR), of having started operations and the activity of the commercial establishment. r. Statement of results and balance sheets authorized by a registered accountant, with the corresponding stamps and professional seal. s. Payment of the corresponding special stay permit fee for each year: One Hundred American Dollars (US$100.00) per person. t. Payment of the corresponding fee for certificates, certifications or statements: Two Hundred Lempiras (L. 200.00) *The Free Zone does not require an operation permit or certification of SAR. Must submit a resolution of being registered in ZOLI mechanism. *All the documents from abroad must be duly legalized. Those authorized in a foreign language must be officially translated by the Ministry of Foreign Affairs and International Cooperation, or the consulates of Honduras. SPECIAL STAY PERMIT FOR FOREIGN ECONOMIC DEPENDENTS The authorization granted by the National Institute for Migration and Foreign Affairs to the spouse and children, minors or adult dependents, and the grandparents of the persons mentioned above. Who performs the procedure? The Legal Proxy Where Is It Done? The National Institute of Migration Cost: US$100 per year + L. 200.00 for the certification Average Time: 30 business days REQUIREMENTS a. Each petitioner must submit a request to the Head of the National Institute for Migration. b. Stamps required by law duly cancelled adhered to application. c. Provide in the application, the address and telephone number of the petioner.

7. LEGAL ASPECTS AND INCENTIVES

INVESTOR'S GUIDE HONDURAS 2020 - 2021

SPECIAL PERMIT REQUIREMENTS BY CATEGORY FOR ONLINE APPLICATION - SECRETARY GENERAL How to complete the procedure? a. The interested party or legal representative must complete request on the migration platform called Online Application through Immigration Care (ALAM, for its acronym in Spanish), which is designated for procedures of Secretary General and Management of Foreigners. b. After submitting the request through the ALAM platform, the request is assigned to a Legal Officer, who communicates directly by e-mail with the interested party. c. The Legal Officer approves or disapproves the application and notifies the interested party or legal representative. d. If the application is not approved, the interested party or legal representative has a maximum of 10 days to file any outstanding documents that the Legal Officer requests. Average Time: 20 dyas GENERAL REQUIREMENTS: Below, a description of all the general requirements necessary to apply to a Special Permit and which are complemented with the specific requirements according to the type of category applying for:

SPECIAL REQUIREMENTS ACCORDING TO CATEGORY: In addition to the general requirements described above, the information must be completed with the following requirements

according to the category that applies: CATEGORY OF SPECIAL STAY PERMIT (OFFICE OF SECRETARY GENERAL)

NO. 8

DESCRIPTION OF THE REQUIREMENT Copy of Articles of Incorporation, authenticated by Notary Public Employment contract, notarized

HOWTO SUBMIT IT Where applicable Only for contracts with private enterprises and public law entities Centralized and decentralized state institutions, international organizations, foreign governments Only for students

9

10

Employment contract issued by:

11

Certification of admission from the school where studying. Copy of legal personality, notarized Certification of affiliation with the national league Certificate accrediting academic degree, duly authenticated Proof of kinship through authenticated document Certification of the public or private organization for which the foreigner will work

12

For civil associations

DESCRIPTION OF THE REQUIREMENT Scanned Application TGR-1 receipt with a value of US$100.00 for each year TGR-1 receipt with a value L 200.00 per certification TGR-1 for stamp, per person Copy of Passport Photograph 6 centimeters high by 5 centimeters wide Power of attorney duly authenticated by a notary public

NO. 1 2

HOWTO SUBMIT IT Must contain phone number and email

13

For athletes

14

For University degrees

Paid in banking institution

15

Dependents or relatives

3 4 5 6

16

Foreigner in social service, religious without agreement

Duly authenticated by notary public One for each applicant With the general information and legal faculties of the lawyer

7

7. LEGAL ASPECTS AND INCENTIVES

INVESTOR'S GUIDE HONDURAS 2020 - 2021

CATEGORYOFRENEWALOF SPECIALRESIDENCEPERMIT (GENERALSECRETARIAT)

FOREIGN NATIONALS EMPLOYED BY INTERNATIONAL ORGANIZATIONSORGOVERNMENTAL INSTITUTIONS

NO. 7

DESCRIPTION OF THE REQUIREMENT Employment contract, issued by foreign government or international organization

HOWTO SUBMIT IT Signed by legal representative

NO. 1 2 3 4 5 6 7 8 9

DESCRIPTION OF THE REQUIREMENT Scanned Application TGR-1 receipt with a value of US$100.00 for each year TGR-1 receipt, with a value of L 200.00, per certification TGR-1 for stamp, per person Power of attorney, notarized Certification of Resolution Certification of Registration Copy of residence card Copy of Articles of Incorporation, authenticated by Notary Public

HOWTO SUBMIT IT Must contain phone number and email Paid at banking institution

FOREIGN NATIONALS EMPLOYED BY CENTRALIZED OR DECENTRALIZEDSTATE INSTITUTIONS HOWTO SUBMIT IT

NO. 8

DESCRIPTION OF THE REQUIREMENT Employment contract, issued by government institution

Where applicable Mandatory Mandatory Mandatory Where applicable, if renewal and/or

Signed by legal representative

CATEGORY OF MIGRANT STATUS OF ECONOMICALLY DEPENDANT FOREIGNER HOWTO SUBMIT IT Where aplicable NO. 8

modification of conditions within the same category Only for contract by private companies and public law entities if the previous contract is not indefinite Centralized and decentralized state institutions, international agency, foreign governments if this is not of indefinite validity Only for students For civil associations For athletes For University degrees Dependents or relatives (family) Businesspeople Foreigner in social service, religious without agreement

DESCRIPTION OF THE REQUIREMENT Proof of kinship through authenticated document Proof of marriage and De Facto union by means of an authenticated document.

10

Employment contract, notarized

Where aplicable

11

Employment contract issued by:

9

FOREIGNHIREDBYANATURALPERSON

12 13 14 15 16 17 18

Certification from the school where studying. Certification of service. Certification of the team for which the service is provided Certification of bank or Certification of services, contract if providing services in company or institution, if this is not of indefinite validity. Proof of economically dependence, if that is the case Operation permit Certification of services in public or private institutions.

NO. 8

DESCRIPTION OF THE REQUIREMENT Employment contract

HOWTO SUBMIT IT Authenticated by Notary Public

FOREIGNEREMPLOYEDBYLEGALENTITY

NO. 8

DESCRIPTION OF THE REQUIREMENT Copy of legal personality

HOWTO SUBMIT IT Authenticated by Notary Public Authenticated by Notary Public

Employment contract

9

7. LEGAL ASPECTS AND INCENTIVES

INVESTOR'S GUIDE HONDURAS 2020 - 2021

Who performs the procedure? The Businessperson or Legal Proxy Where is it done? The Department of Labor Control at the Honduran Social Security Institute (IHSS, for its acronym in Spanish) Average Time: 30 days Cost: No cost. REQUIREMENTS: a. Document certifying the name of the employer (Merchant or company´s Articles of Incorporation). b. Document accrediting the legal representative of the employer and RTN. c. A copy of the RTN of the Merchant or company. d. Address of the employer (2 Sketch map on separate sheet, of business location). e. A copy of the identity cards of each of the shareholders, or passport or residence card in case of foreigners. f. A copy of a public utility receipt. (HONDUTEL or SANAA) g. Panoramic photograph of business or office location, at an appropriate distance. h. A copy of the current operation permit of the Municipality. i. Complete the application for the creation of the medical assistance application and receive an electronic template. j. Two copies of identity and list of workers indicated.

*All these images must be sent to the e-mail of the migration officer in charge of the request. If the application is submitted by the legal representative, an image of the authenticated power of attorney, stamp and identification must be uploaded. Any questions or queries can be made to the call center: 2232 7800 ext. 220 Secretary General. *All documents coming from abroad must be presented duly legalized and those authorized in foreign language officially translated by the Ministry of Foreign Affairs and International Cooperation or at the Consulate of Honduras. 7.2 HONDURAN SOCIAL SECURITY INSTITUTE (IHSS) AFFILIATION PROCESS All legally constituted natural persons or legal entities who have their operation permit must register with the IHSS. Under article 25 of the Regulations of Law for the Honduran Social Security Institute (IHSS, for its acronym in Spanish), all workers who enter employment relations with an employer must be registered as members of the Social Security Institute from the first working day. The worker will provide the employer all the data and information necessary for correct registration.

7. LEGAL ASPECTS AND INCENTIVES

INVESTOR'S GUIDE HONDURAS 2020 - 2021

PERCENTAGEOF IHSSCONTRIBUTIONS,YEAR2020 ENTERPRISESWITH11ORMORE EMPLOYEES CONCEPT EMPLOYER

EMPLOYEE

APPLICATION CEILING

2.5%

Health Care Insurance Regime

5.0%

Maximum contribution ceiling equivalent to L 9,380.67 Maximum contribution ceiling equivalent to L 9,792.74 On the surplus of L 9,792.74, without contribution salary ceiling Up to a maximum ceiling of three (3) minimum wages (L. 9,792.74 x 3) = L 29,378.22

2.5

Collective capitalization Regime (disability, old age and death) Complementary Individual Capitalization Account of the Social Prevision Regime Employer contribution to Employment Insurance

3.5%

1.5%

1.5%

3.30%

COMPANIESWITH10OR LESS EMPLOYEES CONCEPT EMPLOYER

EMPLOYEE

CEILING OF APPLICATION

2.5%

Health Care Insurance Regime

5.0%

Maximum contribution ceiling equivalent to L 9,380.67 Maximum contribution ceiling equivalent to L 9,779.86 On surplus of L 9,779.86 without contribution salary ceiling Up to a maximum ceiling of three (3) minimum wages (L 9,779.86 x 3) = L 29,339.58

0.15%

Collective

capitalization

Regime

0.15%

(disability, old age and death) Complementary Individual Capitalization Account of the Social Prevision Regime

0.45%

0.45%

Employer contribution to Employment Insurance

1.98%

7. LEGAL ASPECTS AND INCENTIVES

INVESTOR'S GUIDE HONDURAS 2020 - 2021

7.2.1 ONLINE REGISTRATION APPLICATIONS INDIVIDUAL REGISTRATION OF A PERSON Any independent worker may join the IHSS individually, provided they meet the following requirements: REQUIREMENTS: a. Last two Electric Power service receipts (ENEE, for its acronym in Spanish) b. A copy of identity card c. A copy of the numerical RTN d. E-mail e. Sketch map of the house f. Photographs of the business g. Operation permit or Merchant’s Deed of the applicant h. Medical evaluation. * All information must be sent to e-mail dilcia.martinez@ihss.hn EMPLOYER REGISTRATION The requirements to register a company (employer) in the IHSS are the following: REQUIREMENTS: a. Document certifying the name of the employer (Merchant or company´s Articles of Incorporation) b. Document accrediting the legal representative of the employer (copy of identity card and RTN) c. RTN of the Merchant or of the company d. Exact address of the employer (sketch map on separate sheet, from business location) e. Identity card of each shareholder; in the case of foreigners, passport or residence card. f. A copy of telephone bill from the offices from the companies: Hondutel, Tigo or Claro. g. Photographs of the building façade where the business or office is located, at an appropriate distance.

h. Copy of the current operation permit of the Municipality office. i. Complete application for the creation of the ATEMED application (online query system) and update data for electronic spreadsheet submission. j. Excel listing of workers indicated. k. Download and fill out the form below. * All information must be sent to rosa.maradiaga@ihss.hn GENERAL INFORMATION ON APPLICATIONS: APPLICATION FOR REGISTRATION, DISCHARGE AND CHANGE OF SPREADSHEETS The IHSS is working online; for Registrations, cancellations and changes in spreadsheets send email to afiliacion@ihss.hn, glenda.nunez@ihss.hn. In case of needing template spreadsheet, send a message to katiria.gomez@ihss.hn requesting information. REQUEST OF PROCEDURE TO THE SECRETARY GENERAL Send the request by means of the following emails: Tegucigalpa: secretariageneral@ihss.hn San Pedro Sula: secretariaregional@ihss.hn.

7. LEGAL ASPECTS AND INCENTIVES

INVESTOR'S GUIDE HONDURAS 2020 - 2021

Download Application for membership of employers https://www.ihss.hn/wp-content/uploads/2020/06/FORMATO-INSCRI PCION-PATRONAL.pdf

DEPARTAMENTO DE CONTROL PATRONAL SEGUNDO NIVEL EDIFICIO ADMINISTRATIVO, BARRIO ABAJO TEL 2237-4736 y 2237-4786 EXT. 1201 Correo electrónico joseaguero@ihss.hn SOLICITUD PARA INSCRIPCIÓN DE PATRONOS

Lugar Y Fecha Nombre del Patrono Nombre Comercial Dirección de la empresa ll

NOTA: EL SEÑOR PATRONO O SU REPRESENTANTE LEGAL, DEBERÁN PROPORCIONAR LA INFORMACIÓN QUE LE SOLICITEN LOS SEÑORES INSPECTORES DEL INSTITUTO HONDUREÑO DE SEGURIDAD SOCIAL, O PRESENTARSE A LA DIRECCIÓN ARRIBA INDICADA CON LOS DOCUMENTOS SOLICITADOS, DENTRO DE LOS ( 3 ) TRES DÍAS POSTERIORES A LA SEÑALADA , SU NEGATIVA U OBSTÁCULO A SU LABOR SERÁ MOTIVO PARA QUE SU INSCRIPCIÓN PROCEDA DE OFICIO Y SE HARÁ ACREEDOR A LAS SANCIONES PREVISTA EN LOS ARTÍCULOS 84,85Y 88 DE LA LEY DE SEGURO SOCIAL DECRETO 80-2001

Teléfono fijo

Tel. celular

Actividad económica

Correo Electrónico Nombre del Gerente: __________________________________________________________ DETALLE DE LOS DOCUMENTOS REQUERIDOS (En Fotocopias ) 1.- DOCUMENTO QUE ACREDITE EL NOMBRE DEL PATRONO ( ESCRITURA DE COMERCIANTE INDIVIDUAL O SOCIEDAD) 2.- DOCUMENTO QUE ACREDITE AL REPRESENTANTE LEGAL DEL PATRONO. (Copia de Identidad y R.T.N) 3.- R. T. N . DEL COMERCIANTE INDIVIDUAL O DE LA SOCIEDAD 4.- DIRECCIÓN EXACTA DEL PATRONO ( CROQUIS EN HOJA APARTE DE LA UBICACIÓN DEL NEGOCIO) 5.- TARJETA DE IDENTIDAD DE CADA UNO DE LOS SOCIOS O PASAPORTE O CARNET DE RESIDENCIA EN EL CASO QUE SEAN EXTRANJEROS. 6.- COPIA RECIBO DE TELÉFONO DE LAS OFICINAS DE LA EMPRESA DE HONDUTEL, TIGO O CLARO. 7.- FOTOGRAFÍAS DE LA FACHADA EN DONDE ESTÁ UBICADO EL NEGOCIO U OFICINA A UNA DISTANCIA ADECUADA. 8- COPIA DE PERMISO DE OPERACIÓN DE LA ALCALDÍA MUNICIPAL VIGENTE. 9- LLENAR SOLICITUD PARA LA CREACION DE LA APLICACIÓN ATEMED Y ACTUALIZACIONDE DATOS PARA ENVIO DE PLANILLA ELECTRONICA. 10.- LISTADO EN EXCEL DE LOS TRABAJADORES INDICANDO:

FIRMA SEÑOR PATRONO O GERENTE GENERAL

FIRMA INSPECTOR DE CONTROL PATRONAL

N. IDENTIDAD

NOMBRE Y APELLIDOS COMPLETO

FECHA DE INGRESO

SALARIO REAL

ADJUNTAR COPIA DE TARJETA DE IDENTIDAD POR TRABAJADOR

FECHA LIMITE PARA ENTREGA DE DOCUMENTOS OBSERVACIONES

Señor Patrono: si usted ha recibido la charla sobre la ley y los beneficios que le proporciona el IHSS. Haga el favor de manifestarlo poniendo su nombre, firma y sello en este espacio:

__________________________________

________________________________

Nombre

Firma y Sello

7. LEGAL ASPECTS AND INCENTIVES

INVESTOR'S GUIDE HONDURAS 2020 - 2021

contribute to improving their quality of life and socio-economic status. Any company with ten (10) or more employees at national level must contribute to the RAP on a mandatory basis. RAP allows voluntary affiliation of any company with a minimum of 5 employees. BENEFITS a. Double savings, interests and surplus payments b. Loan Program c. Access to a retirement account d. Handling and payment of severance pay e. Withdrawal of Contributions f. Access to housing finance at lower interest rates and better terms than those of the private financial market. This benefit includes purchase and construction of housing, purchase of land, home improvements and repairs, and mortgage release. g. Loans on contributions. h. Credit card debt consolidation loans.

COURSES (new courses are routinely posted): • Customer Service • Financial Administration • Office IT

• Professional Ethics • Computer Science • Business Coaching • Biosecurity of the Company

• Positive Mental Attitude • Statistical Quality Control • Teamwork • Entrepreneurship in times of crisis • Occupational Mental Health • Strategic Planning • Leadership with Emotional Intelligence • Emotional Intelligence • Personal Finance • Business Motivation 7.4 PRIVATE CONTRIBUTIONS REGIME (RAP)

It is the largest private financial institution of social interest in Honduras, which manages resources of a private nature, with legal personality, of indefinite duration and its own assets, which provides support, benefits, and financial services to its members. The social purpose of the RAP is to collect and manage workers and employers’ financial contributions from private companies and independent workers, to provide beneficiaries with financial products and services that

Who performs the procedure? The businessperson Where is it done? The Private Contributions Regime Average Time: Three to four business days Cost: No cost

7. LEGAL ASPECTS AND INCENTIVES

INVESTOR'S GUIDE HONDURAS 2020 - 2021

7.3 NATIONAL INSTITUTE FOR PROFESSIONAL TRAINING (INFOP) The National Institute for Professional Training - INFOP, established by Law Decree No. 10 of December 28, 1972, is the governing body for professional training policies aimed at the economic and social development of the country for all sectors of the economy, providing Hondurans an option for education, training, and certification to meet the challenges of modern society. 7.3.1 REGISTRATION PROCEDURE FOR CONTRIBUTORS According to the Law for the National Institute of Professional Training´s articles: ART. 22: The Autonomous Institutions except the National Autonomous University of Honduras will contribute monthly to the Institute, one percent (1%) of wages and salaries earned. ART. 23: Companies that contribute one percent (1%) of the amount of wages earned per month to the INFOP, may deduct this contribution from the gross income, for purposes of filing income tax. (Law for Financial Equilibrium and Social Protection, Decree No. 194-2002). ART. 24: Companies with a working capital of more than twenty thousand lempiras (L 20,000.00) will contribute monthly to the Institute, one percent (1%) of wages and salaries earned, even if they employ less than five (5) workers. Who performs the procedure? The employer or any person so designated Where is it done? The National Institute of Professional Training Average time: Half an hour Cost: No cost REQUIREMENTS: a. Fill out the registration form (it is delivered to the Contribution Management Department. It must be signed and sealed by the General Manager or Legal Representative, or filled online) b. Copy of: • The Articles of Incorporation • Current operation permit • National Tax Registry (RTN) of the company • Identity card of the Manager or Legal Representative

OBLIGATIONS OF PRIVATE EMPLOYERS CONTRIBUTORS REQUIREMENTS: a. Register with the Institute’s Register of Contributors. b. Present employer balance sheet for the preceding financial year within sixty (60) days of the close of operations c. Submit authorized copies of the spreadsheets and wages earned by the workers, or other equivalent documents, on a monthly basis. d. Structure and develop the professional training services that are established, in accordance with the provisions of the Institute. e. Display, when required by accredited representatives of the Institute, the accounting documentation necessary for the verification of contributions.This information will be kept confidential. f. Provide the institute, within the time limits set out, the information it requires for the fulfilment of its purposes. g. Any other resulting from this Law and its regulations. *Contributions must be paid at the financial institution determined by the Infop, within ten (10) working days following the corresponding month. The delay in the payment of a contribution will generate a ten percent (10%) surcharge if the delay corresponds to two or more contributions, the Institute will fine the debtor in accordance with Article 32 of this Law. The months of June and December are paid double. REGISTRATION FOR ONLINE COURSES REQUIREMENTS: a. Go to the website: https://apps.cloudtechn.com/inscripcion/form_inscripcion/ b. Complete the form and press the REGISTER button at the end of the form. c. A confirmation e-mail is automatically sent, with information required to start the course such as: user, password, platform address, course start date and completion date. d. Start, develop, and complete the course on the date indicated in the confirmation email. e. Download the Digital Certificate from infop.hn/certificados.

7. LEGAL ASPECTS AND INCENTIVES

INVESTOR'S GUIDE HONDURAS 2020 - 2021

7.4.1 INDIVIDUAL AFFILIATION Membership created for persons who have contributed to the Regime and wish to continue to obtain the provided benefits. REQUERIMENTS: a. Original and Copy of Identity Card. b. Complete the affiliation and upgrade form (RAP Affiliates): full name, identity number, kinship, and beneficiary information. c. Completion of voluntary individual affiliation, housing fund and financial inclusion contract. d. Monthly income record • Wage earners must present proof of work with details of income; such proof must be no older than 30 days. • If Merchant, present Articles of Incorporation and financial statements for current or previous year. • Persons with income from remittances, submit bank record of the remittances received in the last six (6) months to calculate average amount. • Receipt or proof of professional fees, contracts, or any other document that the RAP deems appropriate to support the corresponding service. 7.4.2 BUSINESS AFFILIATION It is the Worker-Employer contribution: Equivalent to 1.5% worker, 1.5% Employer, it constitutes a mandatory contribution of the employers and workers of the country, which is credited in the form of savings deposits in favor of each contributing worker. REQUIREMENTS: a. A copy of the Articles of Incorporation or document that protects legal personality and the respective reforms. b. A copy of the Administration and Representation Power of Attorney. c. A copy of the Identity Card of the Legal Representative and the Company Contact d. A copy of the RTN of the company and its legal representative. e. Complete Employer Affiliation Form f. Current Operation Permit g. Prepare the RAP Spreadsheet below, and submit 2 copies. h. A copy of the identity card of each employee. i. A copy of the previous month’s payroll (signed and stamped). j. Attach a copy of the IHSS spreadsheet for the month prior to

affiliation. k. Fill out registration sheets of the affiliate and beneficiaries (after the delivery of documents). l. Receive an informative speech about the benefits of being a contributor to RAP, for which the employer must coordinate date where all or most employees should be present. m. Map of company location, with signature and stamp of the company n. Signature Register * All documents produced by the company must be presented to the RAP, duly sealed and signed. * Please indicate who is the Legal Representative and Shareholders with their respective identity numbers.

7. LEGAL ASPECTS AND INCENTIVES

INVESTOR'S GUIDE HONDURAS 2020 - 2021

RAP SPREADSHEET FORM

Name of the Company:______________________ Minimum wage according to sector: _____________

Month /Year: _____________________________ Business sector: ___________________________

QUANTITY 1. 2.

IDENTITY CARD NUMBER

FULL NAME ACCORDING TO IDENTITY

ORDINARYWAGE

Signature and seal of Legal representative of the Company__________________________________

7.5 MINISTRY OF LABOR AND SOCIAL SECURITY (STSS) 7.5.1 EMPLOYMENT CONTRACT An employment contract is an agreement between the employer and the employee, in which the latter promises to provide certain services on behalf of the employer and under her/his direction, in return for remuneration. Contract can be signed by: a. Legal age (18 years old). b. Legally emancipated persons under the age of 18. c. Over 16 years old and under 18 years old, if they have the consent of their parents or guardians. If they live independently, with the express or tacit consent of their parents or guardians. d. Foreigners, in accordance with the applicable law. The employment contract may be formalized verbally or written when the Law so provides. Each party may require the contract be concluded in written form, at any time during the employment relationship. Concerning the probationary period, its establishment is optional and by mutual agreement; it must be reflected in the written contract, without exceeding two (2) months. During this period, the employment relationship may be terminated at will of either party; without any cause and without notice, unless otherwise agreed. No probationary period may be established when the worker has previously performed the same functions in the company, under any form of recruitment.

7. LEGAL ASPECTS AND INCENTIVES

INVESTOR'S GUIDE HONDURAS 2020 - 2021

7.5.2 INTERNAL COMPANY POLICY The Internal Company Policy is the set of mandatory rules that determine the conditions to which the employer and the employees of a company must be subject in the provision of the service. The Internal Company Policy is mandatory when an employer has: a. More than five permanent employees in commercial companies. b. More than ten workers in industrial companies. c. More than twenty workers in agricultural, livestock or forestry companies. A joint committee constituted of representatives of the employer and the employees, will review the text of the Policy prior to submitting it to the Ministry of Labor for approval, through a legal professional (articles 87, 88, 89 of the Labor Code). When the application is submitted with all the required documents and requirements, the Ministry takes an average of 30 working days to approve it, and to issue the relevant certification. 7.5.3 SPECIAL POLICY When the activity of the company is not covered by the General Regulations on Preventive Measures for Accidents at Work and Occupational Diseases, the approval of a special policy is required, to regulate existing risks of the company, and is also approved by the Ministry of Labor. A legal professional will submit the application with all the documents and requirements. The Ministry takes an average of 30 working days to approve and issue the certification.

7.5.4 OBLIGATIONS Employers are also required to:

a. Grant paid vacations to the workers, after each year of continuous work, in accordance with Chapter III, Title IV of the Labor Code. b. Merchants must keep a register of employees with pertinent information. c. Pay the Education Bonus to workers who earn up to two minimum wages. This bonus will be paid once a year, as compensation to parents and children of school age. The bonus will not be paid to those working in small and micro-enterprises, with no more than 15 permanent workers (Decree No. 43-97 May 1997). d. Pay each worker the thirteenth month of wages as social compensation. This payment must be made in June (Legislative Decree No. 135-94, June 1995). e. Require work permit to foreign persons before hiring. According to Law No. 110, November 1966, article 11 of the Labor Code, a company may not employ less than 90 % of Honduran workers, and no more than 15% of company payroll may be paid to foreign workers. f. Request authorization for working permit for children over 14 and under 18 years of age. This authorization is granted at the request of the minor’s parents, siblings or legal representative (articles 115, 119, 120 and 122, Children and Adolescents Code). g. Pay at least minimum wage and comply legal salary adjustments when approved. 7.6 INCENTIVE REGIMES FOR EMPLOYMENT GENERATION Employment programmes are implemented and developed through the Honduran National Employment Service, that includes: a. Law for Hourly Employment b. Presidential Program "Con Chamba Vivís Mejor" c. Program "Chamba Joven"

7. LEGAL ASPECTS AND INCENTIVES

INVESTOR'S GUIDE HONDURAS 2020 - 2021

f. Overtime payment is recognized. g. Contracts may be concluded for 1, 3, 6, 9, or 12 months depending on the need of the employer. They may be renewed as often as needed, without the employee acquiring permanence and seniority, and they must also be registered. h. Contracts shall be concluded in accordance with the model established by the Ministry of Labor. i. These employees are also registered and entitled to Social Security, and registration is mandatory regardless of the salary to be earned, or whether they reach the wage cap or not. j. Contributions to the INFOP are mandatory. k. They are entitled to the payment of one vacation day for each month worked. l. Employees are entitled to one day off per week if they work 6 days, plus one day per month agreed between the parties. m. Hourly employees are given preference to fill a permanent vacancy in the company n. The grounds provided under the Labor Code on which the employer is allowed to dismiss the worker without liability on his part are applicable to him, and if dismissal is without a just cause, worker is entitled to compensation in the amount of money accrued until the date of termination of the current contract. o. This Law demands the payment of severance pay. p. The effective work performed outside the limits of the agreed working day, constitutes an extra-ordinary working day and must be remunerated in accordance with the provisions of the Labor Code (based on the minimum wage and not on the hours contracted).

The following is a description of each program: 7.6.1 LAW FOR HOURLY EMPLOYMENT: Through this Law, the parties may establish working contracts (hourly, ordinary half-days, daily, mixed or night shift), under the modalities of limited time or for specific work or services. The minimum hiring hours are 3 hours per day.

MODALITYOF WORKING DAY Day shift

HOURS PERWEEK 44 hours 42 hours 36 hours

HOURS PER DAY 8 hours 7 hours 6 hours

Mixed shift Night shift

EMPLOYEES RIGHTS: a. The Law on Hourly Employment establishes that remuneration shall include all the rights acquired by the worker, as well as severance payment, enjoyed by permanent workers. b. One day of vacation per month (12 days of rest per year). c. It is compulsory for companies, to make hourly workers permanent after a defined period. d. Hourly workers will receive compensation bonuses for period worked, in the event of termination of employment. e. Workers will enjoy the right to freedom of association and collective bargaining.

7. LEGAL ASPECTS AND INCENTIVES

INVESTOR'S GUIDE HONDURAS 2020 - 2021

REQUIREMENTS: a. Individual working contracts for an indefinite period. b. Affiliation with the Honduran Social Security Institute (IHSS, for its acronym in Spanish). c. Payment of the minimum wage according to the category and number of employees. d. The enterprise must be affiliated with the Chamber of Commerce. PROCESS OF PARTICIPATION: Step 1 a. Expression of interest to participate, in the Chamber of Commerce of the locality. In this step, the evaluation of the company is carried out by the Presidential Programwith "Chamba Vivís Mejor" Step 2 a. Application for an agreement between the Chamber of Commerce and the company. b. A copy of the the company´s Articles of Incorporation. c. A copy of the company’s RTN. d. Operation permit. e. A copy of the identity card or passport of the company’s legal representative. f. A copy of a power of attorney certifying his representation. g. Certification of delegation of signatures authorized by the legal representative of the company. Step 3 a. Information sheet of the beneficiary b. Registration of the contracted beneficiary. c. A copy of working contract for an indefinite period. d. A copy of the identity card of each beneficiary. e. IHSS spreadsheet of additions. The spreadsheet of additions must be submitted to the Chamber of Commerce at the time it is issued by the IHSS. Step 4 a. Application for payment of economic beneficiary. b. Monthly payroll of beneficiaries. c. 3-month payment voucher signed by the beneficiaries, or copy of proof of electronic transfers, duly accredited by the banking institution.

REQUIREMENTS: a. A copy of the Company Operations permit. b. A copy of RTN. c. A copy of Articles of Incorporation. d. Permanent employee spreadsheet of the last three months. PROCESS OF PARTICIPATION: a. Register the company with the Ministry of Labor. b. Fill out the Application form for the Registration of a Legal Entity with the following documents: c. Spreadsheet of the last 3 months, without indication of wage; only name and position. d. A copy of the Articles of Incorporation or operation permit. e. Each concluded contract must be registered with the Ministry, filling out the registration form with a copy of the contract and the employee’s identity. *The Ministry of Labor provides a document entitling the company from that day forward, to hire employees under the program. *The law applies only to new hires. 7.6.2 PRESIDENTIAL PROGRAM "CON CHAMBA VIVIS MEJOR" It consists of a payment of half of the average minimum wage for each new job generated by the company, an incentive that will be delivered during the 2-month trial period. An additional month of subsidy will be given to the beneficiary companies that maintain 70% of the beneficiaries after the end of the trial period. DESCRIPTION: a. Target population characteristics: Unemployed persons. b. Condition of the Participant: Registered with the National Employment Service

c. Territory: Natiowide, urban and rural area. d. Conditions of the participating enterprise: • Ensure permanent work • Social security of the worker

• Payment of at least, the minimum wage • Have an indefinite contract of employment e. Business associations as joint managers of the program, will be the participating companies.

7. LEGAL ASPECTS AND INCENTIVES d. Registration of desertion duly accredited according to the grounds for dismissal established in the Labor Code. e. IHSS spreadsheet, highlighting the beneficiaries. *It is important to join the Chamber of Commerce of the locality, as this process is done through this organization. 7.6.3 PROGRAM " CHAMBA JOVEN " It aims to provide financial benefit to young people between the ages of 18 and 30, who have completed the highschool and university studies in search of their first job, for up to 5 months. As well as free labor for businesses. INCENTIVE: a. L 4,300.00 to young people who have completed highschool and/or university interns. b. L 6,000.00 for young university graduates. *Payment is made through the National Agricultural Development Bank (BANADESA). PROCESS OF PARTICIPATION: a. Submit application for participating in the program “Chamba Joven”, attaching sketch map with company ´s address and vacancy profile, if available b. Evaluation of the company by the Program “Chamba Joven”. Only after the program notifies the participation approval, the beneficiary can start the internship. c. Business Registration in the Program “Chamba Joven”, attaching: • Company´s Articles of Incorporation. • Operation Permit.

INVESTOR'S GUIDE HONDURAS 2020 - 2021

• RTN of the company. • Vacancy profile format. d. Signature of an Act of Commitment to participate in the project, by the company’s representative. e. The National Employment Service in Honduras (SENAEH, for its acronym in Spanish), will send the candidates according to the profile of the vacancy for the requested position and the company will select them f. The company will notify the selection of beneficiaries. g. Daily attendance record by the company (to be delivered at the end of each month). h. Notification of desertion of beneficiaries, if any. i. Performance evaluation of the beneficiary and issuance of proof of completion of internship. *The participation in this project involves announced or unannounced visits by the program monitoring department to verify the company’s facilities as well as the functions of the beneficiary. THE EDUCATION BONUS It is for workers who receive up to the equivalent of two minimum wages and who have their children of school age: Kindergarten, Primary school and Highschool. WHO PAYS THE EDUCATION BONUS AND UNDER WHAT CONDITIONS? • Enterprises with 16 and more employees • Payment is once a year, after the first quarterly test • It is proportional based on time worked • Payment is by family

7. LEGAL ASPECTS AND INCENTIVES

INVESTOR'S GUIDE HONDURAS 2020 - 2021

MINIMUMWAGE TABLE (IN L) VALID SINCE JANUARY 1ST, 2020

ORDINARYWORKING DAY OF 8 WORKING HOURS

N0.

BRANCH OF ECONOMIC ACTIVITY *

ENTERPRISE SIZE BY NUMBER OF WORKERS From 1 to 10 From 11 to 50 From 51 to 150 From 151 onwards From 1 to 10 From 11 to 50 From 51 to 150 From 151 onwards From 1 to 10 From 11 to 50 From 51 to 150 From 151 onwards From 1 to 10 From 11 to 50 From 51 to 150 From 151 onwards From 1 to 10 From 11 to 50 From 51 to 150 From 151 onwards From 1 to 10 From 11 to 50 From 51 to 150 From 151 onwards From 1 to 10 From 11 to 50 From 51 to 150 From 151 onwards From 1 to 10 From 11 to 50 From 51 to 150 From 151 onwards From 1 to 10 From 11 to 50 From 51 to 150 From 151 onwards From 1 to 10 From 11 to 50 From 51 to 150 From 151 onwards

MINIMUM MONTHLY WAGE 2020

HOURLY MINIMUMWAGE

L 6,762.70 L 7,131.33 L 7,664.52 L 8,211.30 L 9,239.11 L 9,516.30 L 10,903.93 L 11,865.72 L 9,068.81 L 9,647.84 L 11,054.66 L 12,029.76 L 9,537.15 L 9,823.25 L 11,255.66 L 12,248.49 L 9,366.84 L 9,647.84 L 11,054.66 L 12,029.76 L 9,366.84 L 9,647.84 L 11,054.66 L 12,029.76 L 9,452.01 L 9,735.54 L 11,155.16 L 12,138.11 L 9,622.29 L 9,910.97 L 11,356.16 L 12,357.84 L 9,196.54 L 9,472.44 L 10,853.66 L 11,811.04 L 9,196.54 L 9,472.44 L 10,723.31 L 11,450.43

L 225.42 L 237.71 L 255.48 L 273.71 L 307.97 L 317.21 L 363.46 L 395.52 L 302.29 L 321.59 L 368.49 L 400.99 L 317.91 L 327.44 L 375.19 L 408.28 L 312.23 L 321.59 L 368.49 L 400.99 L 312.23 L 312.59 L 368.49 L 400.99 L 315.07 L 324.52 L 371.84 L 404.64 L 320.74 L 330.37 L 378.54 L 411.93 L 306.55 L 315.75 L 361.79 L 393.70 L 306.55 L 315.75 L 357.44 L 381.68 L 274.21 L 334.07

L 28.18 L 29.71 L 36.94 L 34.21 L 38.50 L 39.65 L 45.43 L 49.44 L 37.79 L 40.20 L 46.06 L 50.12 L 39.74 L 40.53 L 46.90 L 51.04 L 39.08 L 40.20 L 46.06 L 50.02 L 39.03 L 40.20 L 46.06 L 50.12 L 39.38 L 40.56 L 46.48 L 50.58 L 40.09 L 41.30 L 47.32 L 51.49 L 38.32 L 39.47 L 45.22 L 49.21 L 38.32 L 39.47 L 44.68 L 47.71 L 34.28 L 41.76

Agriculture, Forestry, Hunting and Fishing

1

Mining and quarrying

2

Manufacturing Industry

3

4

Electricity, Gas and Water

5

Construction

6

Wholesale and Retail Trade, Restaurants and Hotels

7

Transport, Communications

Storage

and

Financial Establishments, Real Estate and Services provided to enterprises and Personal Services/ Security, Building´s Cleaning Activities Communal, Social

8

9

10

Hospital activities

Companies covered by the Free Zones

11

From 1 onwards

7,652.46

Average MinimumWage

L 10,022.04

7. LEGAL ASPECTS AND INCENTIVES

INVESTOR'S GUIDE HONDURAS 2020 - 2021

TABLE WAGE EMPLOYMENT PER HOUR YEAR 2020 Including 20% Acquired Rights and Unusual Compensation

N0.

BRANCH OF ECONOMIC ACTIVITY *

SIZE OF ENTERPRISES

MINIMUMWAGE (PERMANENT)

DAY SHIFT **

MIXED SHIFT**

NIGHT SHIFT**

From 1 to 10 From 11 to 50 From 51 to 150 From 151 onwards From 1 to 10 From 11 to 50 From 51 to 150 From 151 onwards From 1 to 10 From 11 to 50 From 51 to 150 From 151 onwards From 1 to 10 From 11 to 50 From 51 to 150 From 151 onwards From 1 to 10 From 11 to 50 From 51 to 150 From 151 onwards From 1 to 10 From 11 to 50 From 51 to 150 From 151 onwards From 1 to 10 From 11 to 50 From 51 to 150 From 151 onwards From 1 to 10 From 11 to 50 From 51 to 150 From 151 onwards From 1 to 10 From 11 to 50 From 51 to 150 From 151 onwards From 1 to 10 From 11 to 50 From 51 to 150 From 151 onwards

L 6,762.70 L 7,131.33 L 7,664.52 L 8,211.30 L 9,239.11 L 9,516.30 L 10,903.93 L 11,865.72 L 9,068.81 L 9,647.84 L 11,054.66 L 12,029.76 L 9,537.15 L 9,823.25 L 11,255.66 L 12,248.49 L 9,366.84 L 9,647.84 L 11,054.66 L 12,029.76 L 9,366.84 L 9,647.84 L 11,054.66 L 12,029.76 L 9,452.01 L 9,735.54 L 11,155.16 L 12,138.11 L 9,622.29 L 9,910.97 L 11,356.16 L 12,357.84 L 9,196.54 L 9,472.44 L 10,853.66 L 11,811.04 L 9,196.54 L 9,472.44 L 10,723.31 L 11,450.43

L 42.99 L 45.34 L 48.73 L 52.20 L 58.74 L 60.50 L 69.32 L 75.43 L 57.65 L 61.33 L 70.28 L 76.48 L 60.63 L 62.45 L 71.56 L 77.87 L 59.55 L 61.33 L 70.28 L 76.48 L 59.55 L 61.33 L 70.28 L 76.48 L 60.09 L 61.89 L 70.92 L 77.17 L 61.17 L 63.01 L 72.19 L 78.56 L 58.46 L 60.22 L 69.00 L 75.09 L 58.46 L 60.22 L 68.17 L 72.79

L 45.04 L 47.49 L 51.05 L 54.69 L 61.53 L 63.38 L 72.62 L 79.03 L 60.40 L 64.25 L 73.62 L 80.12 L 63.52 L 65.42 L 74.96 L 81.58 L 62.38 L 64.25 L 73.62 L 80.12 L 62.38 L 64.25 L 73.62 L 80.12 L 62.95 L 64.84 L 74.29 L 80.85 L 64.08 L 66.01 L 75.63 L 82.30 L 61.25 L 63.09 L 72.29 L 78.66 L 61.25 L 63.09 L 71.42 L 76.26

L 52.55 L 55.41 L 59.55 L 63.80 L 71.79 L 73.94 L 84.72 L 92.20

Agriculture, Forestry, Hunting and Fishing

1

Mining operations

and

quarrying

2

35.99 38.29 43.15 45.84

Manufacturing Industry 1.) Manufacturing and Handicrafted

3

L 74.10 L 76.33 L 87.46 L 95.17 L 72.78 L 74.96 L 85.89 L 93.47 L 72.78 L 74.96 L 85.89 L 93.47 L 73.44 L 75.65 L 86.68 L 94.32 L 74.77 L 77.01 L 88.24 L 96.02 L 71.46 L 73.60 L 84.33 L 91.77 L 71.46 L 73.60 L 83.32 L 88.97 L 88.97

4

Electricity, Gas and Water

5

Construction

6

Wholesale and Retail Trade, Restaurants and Hotels

7

Transport, Communications

Storage

and

Financial Establishments, Real Estate and Services provided to enterprises and Personal Services/ Security, Building´s Cleaning Activities Communal, Social

8

9

10

Hospital activities

Free Zones ***

11 * Published in the Official Gazette No. 34,840 of January 9, 2019. **Hourly Wage calculation based on the Article 6 of Legislative Decree No 354-2013 dated March 3, 2014, published in the Official Gazette No. 33,393 of March 31, 2014. *** Agreement STSS-006-2019. From 1 onwards 7,652.46 L 72.79 L 76.26

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