In order for the number of foreign investment to increase, the 1998 law declared Honduras a Free Trade Zone (FTZ) - which allows investors to invest anywhere in the country rather than just in a designated area. The Local manufacturing companies will benefit from being able to import tax free U.S. made yarn, fabrics, and dyes to manufacture and process textile products used in the vertical assembly industry.
No import or export duties for material, equipment or office supplies required by the manufacturing plant, also established for export companies operating in Free Zones:
A company that locates in a Free Trade Zane, Industrial Park or Export-Processing Zone (EPZ) can be privately owned and is exempt from payment of import duties on goods and capital equipment, charges, surcharges, selective consumption taxes, and sales taxes. In addition, the production and sale of goods within these areas are exempt from Honduran federal and municipal taxes. Firms operating in these zones are exempt from income tax for 20 years and municipal taxes for 10 years, and there are no controls or restrictions on the use of foreign exchange or the repatriation of capital profits.
The general purpose of this law is to establish a framework to render the government's administrative procedures more straightforward and consistent, in order to guarantee that all government agencies fulfill their duties in compliance with strict standards of economy and promptness and in the spirit of service.