Doing Business 2018 Honduras Economy Pro le of Honduras Doing Business 2018 Indicators (in order of appearance in the document) Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company Dealing with construction Procedures, time and cost to complete all formalities to build a warehouse and the quality control and permits safety mechanisms in the construction permitting system Getting electricity Procedures, time and cost to get connected to the electrical grid, the reliability of the electricity supply and the transparency of tariffs Registering property Procedures, time and cost to transfer a property and the quality of the land administration system Getting credit Movable collateral laws and credit information systems Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance Paying taxes Payments, time and total tax rate for a firm to comply with all tax regulations as well as post-filing processes Trading across borders Time and cost to export the product of comparative advantage and import auto parts Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for insolvency Labor market regulation Flexibility in employment regulation and aspects of job quality About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local rms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of labor market regulation. Although Doing Business does not present rankings of economies on the labor market regulation indicators or include the topic in the aggregate distance to frontier score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more e cient regulation; o ers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business o ers detailed subnational reports, which exhaustively cover business regulation and reform in di erent cities and regions within a nation. These reports provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The rst Doing Business report, published in 2003, covered 5 indicator sets and 133 economies. This year’s report covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business, also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has bene ted from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. Page 2   for insolvency Doing Business Labor market 2018 regulation Honduras Flexibility in employment regulation and aspects of job quality About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local rms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of labor market regulation. Although Doing Business does not present rankings of economies on the labor market regulation indicators or include the topic in the aggregate distance to frontier score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more e cient regulation; o ers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business o ers detailed subnational reports, which exhaustively cover business regulation and reform in di erent cities and regions within a nation. These reports provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The rst Doing Business report, published in 2003, covered 5 indicator sets and 133 economies. This year’s report covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business, also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has bene ted from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. The distance to frontier (DTF) measure shows the distance of each economy to the “frontier,” which represents the best performance observed on each of the indicators across all economies in the Doing Business sample since 2005. An economy’s distance to frontier is re ected on a scale from 0 to 100, where 0 represents the lowest performance and 100 represents the frontier. The ease of doing business ranking ranges from 1 to 190. The ranking of 190 economies is determined by sorting the aggregate distance to frontier scores, rounded to two decimals. More about Doing Business (PDF, 5MB) Ease of Doing Business in Latin America & DB 2018 Rank Region 190 1 Caribbean Honduras Income Category Lower middle income 115 DB 2018 Distance to Frontier (DTF) Population 9,112,867 0 100 GNI Per Capita (US$) 2,150 58.46 City Covered Tegucigalpa DB 2018 Distance to Frontier (DTF) 0 100 69.41: Colombia (Rank: 59) 69.13: Costa Rica (Rank: 61) 66.42: El Salvador (Rank: 73) 61.18: Guatemala (Rank: 97) 58.66: Regional Average (Latin America & Caribbean) Page 3   aggregate distance to frontier scores, rounded to two decimals. More Doingabout 2018 (PDF, Doing Business Business 5MB) Honduras Ease of Doing Business in Latin America & DB 2018 Rank Region 190 1 Caribbean Honduras Income Category Lower middle income 115 DB 2018 Distance to Frontier (DTF) Population 9,112,867 0 100 GNI Per Capita (US$) 2,150 58.46 City Covered Tegucigalpa DB 2018 Distance to Frontier (DTF) 0 100 69.41: Colombia (Rank: 59) 69.13: Costa Rica (Rank: 61) 66.42: El Salvador (Rank: 73) 61.18: Guatemala (Rank: 97) 58.66: Regional Average (Latin America & Caribbean) 58.46: Honduras (Rank: 115) Note: The distance to frontier (DTF) measure shows the distance of each economy to the “frontier,” which represents the best performance observed on each of the indicators across all economies in the Doing Business sample since 2005. An economy’s distance to frontier is re ected on a scale from 0 to 100, where 0 represents the lowest performance and 100 represents the frontier. The ease of doing business ranking ranges from 1 to 190. Rankings on Doing Business topics - Honduras 1 12 28 55 82 91 Rank 113 115 109 129 136 144 142 150 152 164 163 190 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Distance to Frontier (DTF) on Doing Business topics - Honduras 100 85.00 80 76.98 65.44 63.42 65.85 60 53.61 DTF 51.74 45.00 45.54 40 32.07 20 0 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Change:-0.05 Change:-0.84 Change:0.00 Investors Change:0.00 Borders Change:0.00 Change:+0.41 Change:-0.04 Permits Change:0.00 Change:0.00 Change:-0.19 Starting a Business Page 4   a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Change:-0.05 Change:-0.84 Change:0.00 Investors Change:0.00 Borders Change:0.00 Change:+0.41 Change:-0.04 Permits Change:0.00 Change:0.00 Doing Business 2018 Honduras Change:-0.19 Starting a Business This topic measures the paid-in minimum capital requirement, number of procedures, time and cost for a small- to medium-sized limited liability company to start up and formally operate in economy’s largest business city. To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The distance to frontier score for each indicator is the average of the scores obtained for each of the component indicators. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally start and operate a To make the data comparable across economies, several assumptions company (number) about the business and the procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay Pre-registration (for example, name verification no bribes. or reservation, notarization) Registration in economy’s largest business city The business: - Is a limited liability company (or its legal equivalent). If there is more than Post-registration (for example, social security one type of limited liability company in the economy, the most common registration, company seal) among domestic rms is chosen. Information on the most common form is Obtaining approval from spouse to start business obtained from incorporation lawyers or the statistical o ce. or leave home to register company - Operates in the economy’s largest business city and the entire o ce Obtaining any gender-specific permission that space is approximately 929 square meters (10,000 square feet). For 11 can impact company registration, company economies the data are also collected for the second largest business city. operations and process of getting national - Is 100% domestically owned and has ve owners, none of whom is a legal identity card entity; and has a start-up capital of 10 times income per capita and has a Time required to complete each procedure turnover of at least 100 times income per capita. (calendar days) - Performs general industrial or commercial activities, such as the production or sale of goods or services to the public. The business does Does not include time spent gathering not perform foreign trade activities and does not handle products subject information to a special tax regime, for example, liquor or tobacco. It does not use Each procedure starts on a separate day (2 heavily polluting production processes. procedures cannot start on the same day) - Leases the commercial plant or o ces and is not a proprietor of real Procedures fully completed online are recorded estate and the amount of the annual lease for the o ce space is equivalent as ½ day to 1 times income per capita. Procedure is considered completed once final - Does not qualify for investment incentives or any special bene ts. document is received - Has at least 10 and up to 50 employees one month after the commencement of operations, all of whom are domestic nationals. No prior contact with officials - Has a company deed 10 pages long. Cost required to complete each procedure (% of The owners: income per capita) - Have reached the legal age of majority. If there is no legal age of majority, Official costs only, no bribes they are assumed to be 30 years old. No professional fees unless services required by - Are sane, competent, in good health and have no criminal record. law or commonly used in practice - Are married and the marriage is monogamous and registered with the authorities. Paid-in minimum capital (% of income per capita) - Where the answer di ers according to the legal system applicable to the Funds deposited in a bank or with third party woman or man in question (as may be the case in economies where there before registration or up to 3 months after is legal plurality), the answer used will be the one that applies to the incorporation majority of the population. Standardized Company Page 5   before registration or up to 3 months after is legal plurality), the answer used will be the one that applies to the incorporation majority of the population. Doing Business 2018 Honduras Standardized Company Legal form Private Limited Company Paid-in minimum capital requirement HNL 0 City Covered Tegucigalpa Latin America & OECD high Indicator Honduras Caribbean income Overall Best Performer Procedure – Men (number) 11 8.4 4.9 1.00 (New Zealand) Time – Men (days) 13 31.7 8.5 0.50 (New Zealand) Cost – Men (% of income per capita) 41.3 37.5 3.1 0.00 (United Kingdom) Procedure – Women (number) 11 8.5 4.9 1.00 (New Zealand) Time – Women (days) 13 31.8 8.5 0.50 (New Zealand) Cost – Women (% of income per capita) 41.3 37.5 3.1 0.00 (United Kingdom) Paid-in min. capital (% of income per capita) 0.0 2.1 8.7 0.00 (113 Economies) Figure – Starting a Business in Honduras and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 85.32: Colombia (Rank: 96) 81.65: Costa Rica (Rank: 127) 79.30: Guatemala (Rank: 139) 78.88: El Salvador (Rank: 140) 78.09: Regional Average (Latin America & Caribbean) 76.98: Honduras (Rank: 150) Note: The ranking of economies on the ease of starting a business is determined by sorting their distance to frontier scores for starting a business. These scores are the simple average of the distance to frontier scores for each of the component indicators. Figure – Starting a Business in Honduras – Procedure, Time and Cost Time Cost 35 12 30 ost (% of income per capita) 10 25 8 Time (days) 20 6 15 4 Page 6   10 starting a business. These scores are the simple average of the distance to frontier scores for each of the component indicators. Doing Business 2018 Honduras Figure – Starting a Business in Honduras – Procedure, Time and Cost Time Cost 35 12 30 Cost (% of income per capita) 10 25 8 Time (days) 20 6 15 4 10 2 5 0 0 1 2 3 4 5 6 7 8 *9 * 10 * 11 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a di erent procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://www.doingbusiness.org/methodology). For details on the procedures re ected here, see the summary below. Details – Starting a Business in Honduras – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Pay the initial capital and obtain the certi cate of the deposit at a local 1 day L. 100 bank Agency : Bank The Mercantile Registry typically requires at least 5,000 lempiras of startup capital in practice. The entrepreneurs need to pay the initial capital in a local bank and obtain the certi cate of the deposit. 2 Establish the company before a notary public, who will draw up the 2 days notary fees of 5% for articles of incorporation companies with Agency : Notary share capital up to L.25,000 and 3% for A company may be set up by public subscription or simultaneous companies with over foundation. The procedures described here are for simultaneous foundation L.25,000 of share (fundación simultánea). capital The constitution instrument should be written on stamped paper (papel sellado). The notary uses this paper for the protocol (the original signed document in the notary’s custody) and for the rst copy (testimonio) of the instrument of organization. 3 File the articles of incorporation with the Mercantile Registry at the 2 days L. 200 for the first Chamber of Commerce L.1,000 of capital + Agency : Chamber of Commerce L.1.5 per L.1,000 of capital or fraction It is necessary to register the Public Deed with the Mercantile Registry at the thereof. Chamber of Commerce. Page 7   4 Apply for the tax identi cation code (Registro Tributario Nacional, RTN) 1 day no charge (http://www.doingbusiness.org/methodology). For details on the procedures re ected here, see the summary below. Doing Business 2018 Honduras Details – Starting a Business in Honduras – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Pay the initial capital and obtain the certi cate of the deposit at a local 1 day L. 100 bank Agency : Bank The Mercantile Registry typically requires at least 5,000 lempiras of startup capital in practice. The entrepreneurs need to pay the initial capital in a local bank and obtain the certi cate of the deposit. 2 Establish the company before a notary public, who will draw up the 2 days notary fees of 5% for articles of incorporation companies with Agency : Notary share capital up to L.25,000 and 3% for A company may be set up by public subscription or simultaneous companies with over foundation. The procedures described here are for simultaneous foundation L.25,000 of share (fundación simultánea). capital The constitution instrument should be written on stamped paper (papel sellado). The notary uses this paper for the protocol (the original signed document in the notary’s custody) and for the rst copy (testimonio) of the instrument of organization. 3 File the articles of incorporation with the Mercantile Registry at the 2 days L. 200 for the first Chamber of Commerce L.1,000 of capital + Agency : Chamber of Commerce L.1.5 per L.1,000 of capital or fraction It is necessary to register the Public Deed with the Mercantile Registry at the thereof. Chamber of Commerce. 4 Apply for the tax identi cation code (Registro Tributario Nacional, RTN) 1 day no charge Agency : Revenues Administration Service (Servicio de Administración de Rentas, SAR) All natural or legal persons must apply for a tax identi cation code (Registro Tributario Nacional, RTN) at the at the Ministry of Finance's Revenues Administration Service (Servicio de Administración de Rentas, SAR). To obtain it, the notary public who authorizes an incorporation deed must notify the administrative authority of the incorporation. 5 Acquire accounting and minutes books 1 day USD 45 (about USD Agency : Authorized Vendor 0.50 per page) The minute books can be authorized as a separate bound sheet and not necessarily as book. 6 Register with local and national Chambers of Commerce 1 day L. 1,850 Agency : Chamber of Commerce The company needs to register with the local and national chambers of commerce. The cost to register depends on the company's share capital: - Share capital from L. 1 to L. 200,000: L. 590 - Share capital from L. 200,001 to L. 400,000: L. 850 - Share capital from L. 400,001 to L. 700,000: L. 1,850 - Share capital L. 700,001 and above: L. 3,000 Page 8   The minute books can be authorized as a separate bound sheet and not Businessas Doing necessarily book. Honduras 2018 6 Register with local and national Chambers of Commerce 1 day L. 1,850 Agency : Chamber of Commerce The company needs to register with the local and national chambers of commerce. The cost to register depends on the company's share capital: - Share capital from L. 1 to L. 200,000: L. 590 - Share capital from L. 200,001 to L. 400,000: L. 850 - Share capital from L. 400,001 to L. 700,000: L. 1,850 - Share capital L. 700,001 and above: L. 3,000 7 Apply for an operational permit (Permiso de Operación) from the 1 day L. 1,250 municipal authorities Agency : Municipality To obtain the operational permit, some or all of the following documents must be led, depending on the type of industrial or commercial activity: - Personal identity card and municipality tax solvency of the general manager (copies); - Tax identi cation code (RTN) (copy); - Cadastral code (clave cadastral) corresponding to the corporation’s place of business; - Constitution instrument (escritura de constitución de la compañía) (copy); - Zoning constancy; - Tenancy agreement and constancy of income tax solvency corresponding to the owner of the premises in which the company will do business; - Environmental impact statement; - Cadastral inspection of the premises in which the corporation will do business. In addition, the company must pay the following taxes, which vary based on the company’s income: nomenclature tax, zoning tax, inspection tax, code tax, environmental tax, and taxes for re ghting and waste management services (paid annually to the municipality). Regarding the accounting books there are 2 ways in which they can be authorized. If the company follows manual accounting procedures, the books must be led before the Mayor's o ce for authorization. The cost ranges between L.1-5 per page for three mandatory books. If the company opts to keep electronic books, it must request permission from the tax authority (Servicio de Administración de Rentas, SAR) and submit separate bound sheets before the Mayor's o ce by the end of each year (or earlier per the company's decision). In this case there are no associated costs. 8 Register for Sales tax 2 days no charge Agency : Revenues Administration Service (Servicio de Administración de Rentas, SAR) According to the Tax Code (Código Tributario), the company is obliged to record the constitution instrument and the operation permit before the Minister of Finance's Revenues Administration Service (Servicio de Administración de Rentas, SAR), in order to pay sales tax on the sale of goods or services. 9 Register at Social Security Institute (Instituto Hondureño de Seguridad 3 days no charge Social, IHSS) (simultaneous with Agency : Social Security Institute previous procedure) Page 9   The Social Security Institute (Instituto Hondureño de Seguridad Social, IHSS) Administración de Rentas, SAR), in order to pay sales tax on the sale of Doing goods or services. Business 2018 Honduras 9 Register at Social Security Institute (Instituto Hondureño de Seguridad 3 days no charge Social, IHSS) (simultaneous with Agency : Social Security Institute previous procedure) The Social Security Institute (Instituto Hondureño de Seguridad Social, IHSS) is the national social security hospital and outpatient care institution for workers and their dependents. The company is obliged to contribute 5% of each employee’s salary for illness and maternity (enfermedad y maternidad, EM), plus 2% for disability, old age, and death (invalidez, vejez y muerte, IVM) —a total of 7% up to a maximum of L.7,000. Register at the Professional Training Institute (Instituto Nacional de 1 day no charge 10 Formación Profesional, INFOP) (simultaneous with Agency : Hand Labor Training Institute previous procedure) Employers are obliged to contribute 1% of the company’s total payroll to the Professional Training Institute (Instituto Nacional de Formación Profesional, INFOP). Register at Social Fund for Housing (Régimen de Aportación, RAP, del 1 day no charge 11 Fondo Social de la Vivienda, FOSOVI) (simultaneous with Agency : Social Fund for Housing previous procedure) If the company has more than 10 employees, it is obliged to contribute 1.5% of each employee’s salary to the Social Fund for Housing (Régimen de Aportación, RAP, and Fondo Social de la Vivienda, FOSOVI). Applies to women only. Takes place simultaneously with previous procedure. Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required noti cations, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certi cation requirements. The most recent round of data collection was completed in June 2017. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse (number) To make the data comparable across economies, several assumptions about the construction company, the warehouse project and the utility Submitting all relevant documents and obtaining connections are used. all necessary clearances, licenses, permits and certificates The construction company (BuildCo): Submitting all required notifications and - Is a limited liability company (or its legal equivalent) and operates in the receiving all necessary inspections economy’s largest business city. For 11 economies the data are also collected for the second largest business city. Obtaining utility connections for water and - Is 100% domestically and privately owned; has ve owners, none of whom sewerage is a legal entity. Has a licensed architect and a licensed engineer, both Registering and selling the warehouse after its registered with the local association of architects or engineers. BuildCo is completion not assumed to have any other employees who are technical or licensed Time required to complete each procedure experts, such as geological or topographical experts. (calendar days) - Owns the land on which the warehouse will be built and will sell the warehouse upon its completion. Does not include time spent gathering information The warehouse: Page 10   Each procedure starts on a separate day— Applies to women only. Takes place simultaneously with previous procedure. Doing Business 2018 Honduras Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required noti cations, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certi cation requirements. The most recent round of data collection was completed in June 2017. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse (number) To make the data comparable across economies, several assumptions about the construction company, the warehouse project and the utility Submitting all relevant documents and obtaining connections are used. all necessary clearances, licenses, permits and certificates The construction company (BuildCo): Submitting all required notifications and - Is a limited liability company (or its legal equivalent) and operates in the receiving all necessary inspections economy’s largest business city. For 11 economies the data are also collected for the second largest business city. Obtaining utility connections for water and - Is 100% domestically and privately owned; has ve owners, none of whom sewerage is a legal entity. Has a licensed architect and a licensed engineer, both Registering and selling the warehouse after its registered with the local association of architects or engineers. BuildCo is completion not assumed to have any other employees who are technical or licensed Time required to complete each procedure experts, such as geological or topographical experts. (calendar days) - Owns the land on which the warehouse will be built and will sell the warehouse upon its completion. Does not include time spent gathering information The warehouse: Each procedure starts on a separate day— - Will be used for general storage activities, such as storage of books or though procedures that can be fully completed stationery. online are an exception to this rule - Will have two stories, both above ground, with a total constructed area of Procedure is considered completed once final approximately 1,300.6 square meters (14,000 square feet). Each oor will document is received be 3 meters (9 feet, 10 inches) high and will be located on a land plot of No prior contact with officials approximately 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the warehouse is valued at 50 times income per capita. Cost required to complete each procedure (% of - Will have complete architectural and technical plans prepared by a warehouse value) licensed architect. If preparation of the plans requires such steps as Official costs only, no bribes obtaining further documentation or getting prior approvals from external Building quality control index (0-15) agencies, these are counted as procedures. - Will take 30 weeks to construct (excluding all delays due to administrative Sum of the scores of six component indices: and regulatory requirements). Quality of building regulations (0-2) The water and sewerage connections: Quality control before construction (0-1) - Will be 150 meters (492 feet) from the existing water source and sewer Quality control during construction (0-3) tap. If there is no water delivery infrastructure in the economy, a borehole Quality control after construction (0-3) will be dug. If there is no sewerage infrastructure, a septic tank in the smallest size available will be installed or built. Liability and insurance regimes (0-2) - Will have an average water use of 662 liters (175 gallons) a day and an Professional certifications (0-4) average wastewater ow of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and a peak wastewater ow of 1,136 liters (300 gallons) a day. - Will have a constant level of water demand and wastewater ow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection. Standardized Warehouse Page 11   and 4 inches in diameter for the sewerage connection. Doing Business 2018 Honduras Standardized Warehouse Estimated value of warehouse HNL 2,512,976.10 City Covered Tegucigalpa Latin America & OECD high Indicator Honduras Caribbean income Overall Best Performer Procedures (number) 17 15.7 12.5 7.00 (Denmark) Time (days) 94 191.8 154.6 27.5 (Korea, Rep.) Cost (% of warehouse value) 7.5 3.2 1.6 0.10 (5 Economies) Building quality control index (0-15) 10.0 8.8 11.4 15.00 (3 Economies) Figure – Dealing with Construction Permits in Honduras and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 71.02: Costa Rica (Rank: 70) 68.71: Colombia (Rank: 81) 65.44: Honduras (Rank: 113) 64.63: Guatemala (Rank: 116) 63.59: Regional Average (Latin America & Caribbean) 60.16: El Salvador (Rank: 139) Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their distance to frontier scores for dealing with construction permits. These scores are the simple average of the distance to frontier scores for each of the component indicators. Figure – Dealing with Construction Permits in Honduras – Procedure, Time and Cost Time Cost 5 90 80 4 Cost (% of warehouse value) 70 60 Time (days) 3 50 40 2 30 20 1 10 0 0 1 *2 *3 *4 *5 6 *7 *8 9 10 11 12 13 14 15 * 16 17 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Page 12   component indicators. Doing Business 2018 Honduras Figure – Dealing with Construction Permits in Honduras – Procedure, Time and Cost Time Cost 5 90 80 4 Cost (% of warehouse value) 70 60 Time (days) 3 50 40 2 30 20 1 10 0 0 1 *2 *3 *4 *5 6 *7 *8 9 10 11 12 13 14 15 * 16 17 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a di erent procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://www.doingbusiness.org/methodology). For details on the procedures re ected here, see the summary below. Figure – Dealing with Construction Permits in Honduras and comparator economies – Measure of Quality 11.5 11.0 11.0 11.0 11 10.5 10.0 10.0 Index score 10 9.5 9 8.8 8.5 8 7.5 Honduras Colombia Costa Rica El Salvador Guatemala Latin America & Caribbean Details – Dealing with Construction Permits in Honduras – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Obtain results of geotechnical study / soil test 26 days HNL 19,500 Agency : Private licensed company BuildCo will request a soil test for the structural calculations for the foundation. Contractors ask for a soil test to ensure that the foundation of the building is solid. The engineer must understand the suitability of the soil for the proposed construction work. It allows to build a solid foundation and avoid structures to be damaged or collapsed or leaned. Although a soil test is not required by law, it is consistently conducted in practice. 2 Request and obtain environmental approval from O ce of Municipal 21 days HNL 6,756 Environmental Development and Management (GMDAM) Page 13   Agency : O ce of Municipal Environmental Development and Management Honduras Colombia Costa Rica El Salvador Guatemala Latin America & Caribbean Doing Business 2018 Honduras Details – Dealing with Construction Permits in Honduras – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Obtain results of geotechnical study / soil test 26 days HNL 19,500 Agency : Private licensed company BuildCo will request a soil test for the structural calculations for the foundation. Contractors ask for a soil test to ensure that the foundation of the building is solid. The engineer must understand the suitability of the soil for the proposed construction work. It allows to build a solid foundation and avoid structures to be damaged or collapsed or leaned. Although a soil test is not required by law, it is consistently conducted in practice. 2 Request and obtain environmental approval from O ce of Municipal 21 days HNL 6,756 Environmental Development and Management (GMDAM) Agency : O ce of Municipal Environmental Development and Management of Municipality of Tegucigalpa (UMA) First, BuildCo's case would be considered by the O ce of Municipal Environmental Development and Management. Under a major government initiative, the National Competitiveness Program (Programa Nacional de Competitividad) and the municipality (GMDAM) entered into an agreement with SERNA in 2007. As of September 4, 2008, the Law on Environment was approved, as well as other implementing regulations. Article 78 of the law introduced criteria for di erent categories of environmental approvals depending on project risks. Commercial warehouses that t into Category 1 (Article 5) are only subject to environmental control rather than a full scale study at the local level by the O ce of Municipal Environmental Development and Management ('UGA' or 'UMA'). The cost according to Article 70 of Plan de Arbitrios is 1% of the construction cost of the value up to HNL 200,000 + 0.50% of the construction cost of the value between HNL 200,001 - 1,000,000 + 0.05% of the construction cost of the value that exceeds HNL 1,000,000. 3 Obtain results of topographical study 11 days HNL 13,000 Agency : Private licensed company A topographical study is conducted prior to construction to measure the levels on the speci c terrain. It is a general technical requirement when building a structure of this class. 4 Request and obtain approval for connection to water and sewage from 15 days HNL 750 SANAA Agency : SANAA In the meantime, the committee responsible for approving conditions of water and sewerage connections (utility company) meets once a week. 5 Request and obtain approval (constancia) from Public Works Secretary 7 days HNL 500 (SOPTRAVI) Agency : Public Works Secretary (SOPTRAVI) As part of the Building Permit requisites, BuildCo. also needs to process the public works authorization. In parallel with the water and sewage request, BuildCo. can ask for the approval from the Public Works Secretary Page 14   (SOPTRAVI). A fee of HNL 300.00 is charged for the approval and a fee of HNL In the meantime, the committee responsible for approving conditions of Doing water 2018 connections and sewerage Business Honduras (utility company) meets once a week. 5 Request and obtain approval (constancia) from Public Works Secretary 7 days HNL 500 (SOPTRAVI) Agency : Public Works Secretary (SOPTRAVI) As part of the Building Permit requisites, BuildCo. also needs to process the public works authorization. In parallel with the water and sewage request, BuildCo. can ask for the approval from the Public Works Secretary (SOPTRAVI). A fee of HNL 300.00 is charged for the approval and a fee of HNL 200.00 for the inspection. 6 Request and obtain rainwater drainage feasibility analysis from SANAA 7 days no charge Agency : SANAA Once the approval has been granted, BuildCo. can pay for the cost of the rainwater drainage feasibility analysis from SANAA. 7 Request and obtain design guidelines and approval of drawings and 3 days HNL 900 designs from Urban Planning O ce Agency : Urban Planning O ce While asking for the public works authorization, Buildco. must request design guidelines from the Urban Planning O ce near the future construction site. 8 Request and obtain proof of land ownership 1 day no charge Agency : Property Registration At the same time, certi cation that BuildCo owns the land is required. As a result, certi cation from the Property Registration Agency is asked. 9 Request and obtain location clearances (uso de suelo y factibilidad vial) 2 days HNL 150 from the Municipal Authority Agency : Municipal Authority (Alcaldía Municipal) The following documents must be presented to obtain a certi cate of occupancy (Uso de Suelo y Factibilidad Vial) from the Municipality: • Application • Proof of property registration • Designs and drawings • Approvals from the SANAA and the ENEE, and others • Environmental license The new city zoning plan that was introduced in early 2008 is currently being operationalized. One of the main features of the plan is the change of zoning from residential to commercial and its further digitization based on maps from Cadastre and Management Engineering (Engenieria Gerencial). Furthermore, the land use regulations were amended in April 2008, introducing categories based on risk factors. This led to an improvement in the process of obtaining the location clearance, including a time reduction. The application is checked in the back o ce to verify whether the new land use is compatible with land use regulations. 10 Request and obtain building permit 10 days HNL 110,551 Agency : Municipal Authority (Alcaldía Municipal) The permit application documents are reviewed by the Legal Department, the Technical Department, the Professional College, the Environmental Section, and the Chief of Construction Permits. After submitting the permit application and all other required documents, BuildCo pays the application fee at TASA Municipal. Prior to starting construction, BuildCo must notify the Page 15   authority. The application is checked in the back o ce to verify whether the new land Doing use 2018 with is compatible Business land use regulations. Honduras 10 Request and obtain building permit 10 days HNL 110,551 Agency : Municipal Authority (Alcaldía Municipal) The permit application documents are reviewed by the Legal Department, the Technical Department, the Professional College, the Environmental Section, and the Chief of Construction Permits. After submitting the permit application and all other required documents, BuildCo pays the application fee at TASA Municipal. Prior to starting construction, BuildCo must notify the authority. 11 Receive footings and foundations inspection (“inspección de zapatas y 1 day no charge fundaciones”) Agency : Municipal Authority (Alcaldía Municipal) According to the 2010 Building Code of Honduras " Código de Construcción de Honduras" under Section 109, BuildCo is obliged to receive footing and foundations inspection. This inspection should be made after excavations for footings are complete and all reinforcing steel are in place. "Las inspecciones de zapatas y fundaciones deben realizarse luego de que las excavaciones para zapatas estén completas y todos los aceros de refuerzo estén colocados." 12 Receive inspection upon pouring of concrete slabs (“inspección de losas y 1 day no charge contrapisos de concreto”) Agency : Municipal Authority (Alcaldía Municipal) According to the 2010 Building Code of Honduras " Código de Construcción de Honduras" under Section 109, BuildCo is obliged to receive inspection upon pouring of concrete slabs. This inspection must be performed after the steel reinforcement of the slab or sub oor and building service equipment, conduit, piping accessories and other ancillary equipment items are in place, but before any concrete is placed or the stage oor is installed, including the primary ooring. "Las inspecciones de losas y contrapisos de concreto deben realizarse despues de que el acero de refuerzo de las losa o contrapiso y los equipos de servicio del edi cio, conductos, accesorios de tuberias y otros elementos de equipos auxiliares esten en su lugar, pero antes de que cualquier concreto sea colocado o se instale el tablado del piso, incluyendo el entarimado primario." 13 Receive structure inspection (“inspección de estructuras”) 1 day no charge Agency : Municipal Authority (Alcaldía Municipal) According to the 2010 Building Code of Honduras " Código de Construcción de Honduras" under Section 109, BuildCo is obliged to receive structure inspection. This inspection must be made after the roof deck or sheathing, all structure, re ghting locked and braces are in place and pipes, chimneys and vents that need to be concealed are complete and the rough work of the cables , plumbing and electrical, hydraulic and sanitary and heating ducts are approved. "Las inspecciones de estructuras deben realizarse después que la cubierta o entablado del techo, toda la estructura, los bloqueados antifuegos y los arriostramientos estén en su lugar y las tuberías, chimeneas y ventilaciones que deban ser ocultados estén completos y la obra gruesa de los cables, tuberías y conductos eléctricos, hidráulicos y sanitarios y de calefacción estén aprobados." 14 Receive on-site inspection from Fire Department after construction 1 day no charge Page 16   concreto sea colocado o se instale el tablado del piso, incluyendo el Doing entarimado primario." Business 2018 Honduras 13 Receive structure inspection (“inspección de estructuras”) 1 day no charge Agency : Municipal Authority (Alcaldía Municipal) According to the 2010 Building Code of Honduras " Código de Construcción de Honduras" under Section 109, BuildCo is obliged to receive structure inspection. This inspection must be made after the roof deck or sheathing, all structure, re ghting locked and braces are in place and pipes, chimneys and vents that need to be concealed are complete and the rough work of the cables , plumbing and electrical, hydraulic and sanitary and heating ducts are approved. "Las inspecciones de estructuras deben realizarse después que la cubierta o entablado del techo, toda la estructura, los bloqueados antifuegos y los arriostramientos estén en su lugar y las tuberías, chimeneas y ventilaciones que deban ser ocultados estén completos y la obra gruesa de los cables, tuberías y conductos eléctricos, hidráulicos y sanitarios y de calefacción estén aprobados." 14 Receive on-site inspection from Fire Department after construction 1 day no charge Agency : Fire Department According to the 2010 Building Code of Honduras " Código de Construcción de Honduras" under Section 109, BuildCo is obliged to receive Fire Department inspection. 15 Receive connection to water and sewage from SANAA 15 days HNL 30,888 Agency : SANAA After all the required inspection have been conducted, BuildCo. can receive the utilities connections. Receive nal inspection 1 day no charge 16 Agency : Municipal Authority (Alcaldía Municipal) According to the 2010 Building Code of Honduras " Código de Construcción de Honduras" under Section 109, BuildCo is obliged to receive a nal inspection. The nal inspection must be made after all work required by the building permit is nished. 17 Register building at Real Estate Registry 30 days HNL 4,478 Agency : Real Estate Registry (Registro de Bienes Raíces) The last step that BuildCo. has to do is the registration of the warehouse. Reforms and optimization of electronic processing have signi cantly decreased the time to register property. However, in 2009 due to an administrative backlog and delays with the registration process, the procedure for registration of a building is now taking on average 30 days. Takes place simultaneously with previous procedure. Details – Dealing with Construction Permits in Honduras – Measure of Quality Answer Score Building quality control index (0-15) 10.0 Quality of building regulations index (0-2) 1.0 How accessible are building laws and regulations in your economy? (0-1) They must be 0.0 Page 17   purchased; Not Takes place simultaneously with previous procedure. Doing Business 2018 Honduras Details – Dealing with Construction Permits in Honduras – Measure of Quality Answer Score Building quality control index (0-15) 10.0 Quality of building regulations index (0-2) 1.0 How accessible are building laws and regulations in your economy? (0-1) They must be 0.0 purchased; Not easily accessible. Which requirements for obtaining a building permit are clearly speci ed in the building List of required 1.0 regulations or on any accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in Licensed 1.0 compliance with existing building regulations? (0-1) architect; Licensed engineer. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during Inspections by 1.0 construction? (0-2) in-house engineer; Inspections at various phases. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. Quality control after construction index (0-3) 3.0 Is there a nal inspection required by law to verify that the building was built in Yes, nal 2.0 accordance with the approved plans and regulations? (0-2) inspection is done by government agency; Yes, in- house engineer submits report for nal inspection. Do legally mandated nal inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 1.0 Which parties (if any) are held liable by law for structural aws or problems in the Architect or 1.0 building once it is in use (Latent Defect Liability or Decennial Liability)? (0-1) engineer; Professional in Page 18   charge of the Liability Doing 2018 regimes and insurance Business index (0-2) Honduras 1.0 Which parties (if any) are held liable by law for structural aws or problems in the Architect or 1.0 building once it is in use (Latent Defect Liability or Decennial Liability)? (0-1) engineer; Professional in charge of the supervision; Construction company; Owner or investor. Which parties (if any) are required by law to obtain an insurance policy to cover No party is 0.0 possible structural aws or problems in the building once it is in use (Latent Defect required by law Liability Insurance or Decennial Insurance)? (0-1) to obtain insurance . Professional certi cations index (0-4) 2.0 What are the quali cation requirements for the professional responsible for verifying University 1.0 that the architectural plans or drawings are in compliance with existing building degree in regulations? (0-2) architecture or engineering; Being a registered architect or engineer. What are the quali cation requirements for the professional who supervises the University 1.0 construction on the ground? (0-2) degree in engineering, construction or construction management; Being a registered architect or engineer. Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tari s index measures reliability of supply, transparency of tari s and the price of electricity. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection To make the data comparable across economies, several assumptions are (number) used. Submitting all relevant documents and obtaining The warehouse: all necessary clearances and permits - Is owned by a local entrepreneur and is used for storage of goods. Completing all required notifications and - Is located in the economy’s largest business city. For 11 economies the receiving all necessary inspections data are also collected for the second largest business city. Obtaining external installation works and possibly - Is located in an area where similar warehouses are typically located and is purchasing material for these works in an area with no physical constraints. For example, the property is not Concluding any necessary supply contract and near a railway. obtaining final supply - Is a new construction and is being connected to electricity for the rst Page 19   time. architect or engineer. Doing Business 2018 Honduras Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tari s index measures reliability of supply, transparency of tari s and the price of electricity. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection To make the data comparable across economies, several assumptions are (number) used. Submitting all relevant documents and obtaining The warehouse: all necessary clearances and permits - Is owned by a local entrepreneur and is used for storage of goods. Completing all required notifications and - Is located in the economy’s largest business city. For 11 economies the receiving all necessary inspections data are also collected for the second largest business city. Obtaining external installation works and possibly - Is located in an area where similar warehouses are typically located and is purchasing material for these works in an area with no physical constraints. For example, the property is not Concluding any necessary supply contract and near a railway. obtaining final supply - Is a new construction and is being connected to electricity for the rst time. Time required to complete each procedure - Has two stories with a total surface area of approximately 1,300.6 square (calendar days) meters (14,000 square feet). The plot of land on which it is built is 929 Is at least 1 calendar day square meters (10,000 square feet). Each procedure starts on a separate day Does not include time spent gathering The electricity connection: information - Is a permanent one with a three-phase, four-wire Y connection with a subscribed capacity of 140-kilo-volt-ampere (kVA) with a power factor of 1, Reflects the time spent in practice, with little when 1 kVA = 1 kilowatt (kW). follow-up and no prior contact with officials - Has a length of 150 meters. The connection is to either the low- or Cost required to complete each procedure (% of medium-voltage distribution network and is either overhead or income per capita) underground, whichever is more common in the area where the Official costs only, no bribes warehouse is located and requires works that involve the crossing of a 10- meter road (such as by excavation or overhead lines) but are all carried out Value added tax excluded on public land. There is no crossing of other owners’ private property The reliability of supply and transparency of because the warehouse has access to a road. tari s index (0-8) - Does not require work to install the internal wiring of the warehouse. This has already been completed up to and including the customer’s service Duration and frequency of power outages (0–3) panel or switchboard and the meter base. Tools to monitor power outages (0–1) Tools to restore power supply (0–1) The monthly consumption: Regulatory monitoring of utilities’ performance - It is assumed that the warehouse operates 30 days a month from 9:00 (0–1) a.m. to 5:00 p.m. (8 hours a day), with equipment utilized at 80% of capacity Financial deterrents limiting outages (0–1) on average and that there are no electricity cuts (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours Transparency and accessibility of tariffs (0–1) (kWh); hourly consumption is 112 kWh. Price of electricity (cents per kilowatt-hour)* - If multiple electricity suppliers exist, the warehouse is served by the Price based on monthly bill for commercial cheapest supplier. warehouse in case study - Tari s e ective in March of the current year are used for calculation of the price of electricity for the warehouse. Although March has 31 days, for * N o t e : Doing Business m e a s u r e s t h e p r i c e o f calculation purposes only 30 days are used. electricity, but it is not included in the distance to frontier score nor the ranking on the ease of getting electricity. Page 20   Standardized Connection frontier score nor the ranking on the ease of getting electricity. Doing Business 2018 Honduras Standardized Connection Price of electricity (US cents per kWh) 21.1 Name of utility Empresa Nacional de Energia Electrica (ENEE) City Covered Tegucigalpa Latin America & OECD high Indicator Honduras Caribbean income Overall Best Performer Procedures (number) 7 5.5 4.7 2 (United Arab Emirates) Time (days) 39 66.0 79.1 10 (United Arab Emirates) Cost (% of income per capita) 790.8 927.4 63.0 0.00 (Japan) Reliability of supply and transparency of tariff 0 4.2 7.4 8.00 (28 Economies) index (0-8) Figure – Getting Electricity in Honduras and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 88.21: Costa Rica (Rank: 21) 84.02: Guatemala (Rank: 36) 74.18: Colombia (Rank: 81) 71.40: El Salvador (Rank: 88) 70.45: Regional Average (Latin America & Caribbean) 53.61: Honduras (Rank: 144) Note: The ranking of economies on the ease of getting electricity is determined by sorting their distance to frontier scores for getting electricity. These scores are the simple average of the distance to frontier scores for each of the component indicators. Figure – Getting Electricity in Honduras – Procedure, Time and Cost Time Cost 800 35 700 Cost (% of income per capita) 30 600 25 500 Time (days) 20 400 15 300 10 200 5 Page 21   100 getting electricity. These scores are the simple average of the distance to frontier scores for each of the component indicators. Doing Business 2018 Honduras Figure – Getting Electricity in Honduras – Procedure, Time and Cost Time Cost 800 35 700 Cost (% of income per capita) 30 600 25 500 Time (days) 20 400 15 300 10 200 5 100 0 0 1 *2 *3 4 5 6 7 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a di erent procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://www.doingbusiness.org/methodology). For details on the procedures re ected here, see the summary below. Figure – Getting Electricity in Honduras and comparator economies – Measure of Quality 9 8 8 7 7 6 6 6 Index score 5 4.2 4 3 2 1 0 0 Honduras Colombia Costa Rica El Salvador Guatemala Latin America & Caribbean Details – Getting Electricity in Honduras – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Hire certi ed electrical engineer to design external connection and 17 calendar days HNL 5,900 submit design for approval Agency : Electrical Engineer member of the Colegio de Ingenieros mecanicos, electricos y quimicos de Honduras (CIMEQH) An electrical engineer employed by CIMEQH estimates the power needed for the project and designs the external connection. For loads greater than 1,000 kVA, the engineer should go rst to Empresa Nacional de Energia Electrica (ENEE) to request a feasibility study. In a case where the load is 140kVA, this procedure is not necessary. The design and the process of obtaining ENEE's review can only be made by Page 22   an electrical engineer authorized by the CIMEQH. The electrical engineer Honduras Colombia Costa Rica El Salvador Guatemala Latin America & Caribbean Doing Business 2018 Honduras Details – Getting Electricity in Honduras – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Hire certi ed electrical engineer to design external connection and 17 calendar days HNL 5,900 submit design for approval Agency : Electrical Engineer member of the Colegio de Ingenieros mecanicos, electricos y quimicos de Honduras (CIMEQH) An electrical engineer employed by CIMEQH estimates the power needed for the project and designs the external connection. For loads greater than 1,000 kVA, the engineer should go rst to Empresa Nacional de Energia Electrica (ENEE) to request a feasibility study. In a case where the load is 140kVA, this procedure is not necessary. The design and the process of obtaining ENEE's review can only be made by an electrical engineer authorized by the CIMEQH. The electrical engineer must obtain a certi cate by the College for each design that he les with ENEE. The certi cate states that the engineer is a member of the College and has paid his contributions. It is recommended that the internal wiring installation be also done by a CIMEQH's electrical engineer. Although the internal installation plans are reviewed by the Municipality and the Fire ghters, in the context of the process to obtain a building permit, the nal internal installation is not reviewed. One way to ensure the quality of the internal installation is to hire an engineer authorized by CIMEQH for the installation. In the case of a re due to a malfunctioning installation, it is easier to obtain legal satisfaction if it was performed by a member of CIMEQH. After having prepared the design, the engineer has to le the certi cate with the Empresa Nacional de Energia Electrica (ENEE). ENEE reviews the certi cate issued by the College to determine whether it meets ENEE's standards. ENEE also inspects the site. Finally, ENEE approves the design. 2 Request certi cate of good standing for electrical engineer 1 calendar day HNL 360 Agency : Colegio ingeniero Mecánicos, Electricista y Químicos de Honduras (CIMEQH) The electrical engineer must obtain a certi cate by the College for each design that he presents to the Empresa Nacional de Energia Electrica (ENEE). The certi cate states that the engineer is a member of the College and has paid his contributions. 3 Receive site inspection by utility (ENEE) 1 calendar day HNL 0 Agency : Empresa Nacional de Energia Electrica (ENEE) To prepare the design a site visit is conducted. 4 Obtain permit from municipality to cross cables in public property 7 calendar days HNL 15 Agency : Municipality of Tegucigalpa Before to request this permit, the customer has to have the approval of the plans by the utility (ENEE). The costs are calculated assuming that the wires are crossed over public roads. If the connection is underground, a permit to break tracks is needed and the cost will depend on the material used (asphalt, cement, sand, etc.) 5 Await completion of external works by electrical engineer 7 calendar days HNL 359,625 Page 23   Agency : Empresa Nacional de Energia Electrica (ENEE) Doing To prepare the Business design 2018 a site visit is conducted. Honduras 4 Obtain permit from municipality to cross cables in public property 7 calendar days HNL 15 Agency : Municipality of Tegucigalpa Before to request this permit, the customer has to have the approval of the plans by the utility (ENEE). The costs are calculated assuming that the wires are crossed over public roads. If the connection is underground, a permit to break tracks is needed and the cost will depend on the material used (asphalt, cement, sand, etc.) 5 Await completion of external works by electrical engineer 7 calendar days HNL 359,625 Agency : Electrical Engineer member of the Colegio de Ingenieros mecanicos, electricos y quimicos de Honduras (CIMEQH) Three transformers 50kVA or one transformer of 150kVA must be installed. Empresa Nacional de Energia Electrica conducts an inspection of the external connection to ensure that the implementation is according to the approved design. If the reviewer disagrees with the implementation, the responsible electrician has to make the corrections. 6 Submit application to ENEE, pay security deposit and request meter 1 calendar day HNL 15,861.75 installation Agency : Empresa Nacional de Energia Electrica (ENEE) The following documents are required with the application (no notarization of the documents is needed): • A copy of the company's by-laws; • photocopy of the ID of the person authorized by the by-laws; • Sketch / map of where is the warehouse (address). It is necessary to pay a deposit of guarantee or consumption (Article 32 of the Act that rules the electrical sector): Lps.845.96 per KVA. It may be in cash or bank guarantee. Reason: to ensure the payment of consumption ENEE charges after providing the service). The deposit is made via a certi ed check payable to ENEE and / or bank guarantee in the name of ENEE and it is paid in ENEE's commercial division. The division issues a memorandum to the customer care unit for them to ll in the client's appropriate data to install the meter. At this time if the person authorized to submit the application has to submit the following additional information • To whose name the bills will be sent • The rm's company registration number • Copy of the property title or the lease agreement certi ed by the municipality. • Copy of the ID of the person that will sign the documents. • Document specifying that the person who will sign the documents is duly authorized by the board of directors. • The security deposit 7 Receive nal inspection and meter installation by Empresa Energia 7 calendar days HNL 15,700 Honduras (EEH) Agency : Empresa Energia Honduras (EEH) Once the application goes to the "Department of High Consumption", the Department sends an engineer to the site to install the meter. Once the meter is installed, the energy ows. Takes place simultaneously with previous procedure. Page 24   meter is installed, the energy ows. Takes Business Doing 2018 Honduras place simultaneously with previous procedure. Details – Getting Electricity in Honduras – Measure of Quality Answer Reliability of supply and transparency of tari index (0-8) 0 Total duration and frequency of outages per customer a year (0-3) 0 System average interruption duration index (SAIDI) 257.0 System average interruption frequency index (SAIFI) 19.4 What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 5.0 Mechanisms for monitoring outages (0-1) 0 Does the distribution utility use automated tools to monitor outages? No Mechanisms for restoring service (0-1) 1 Does the distribution utility use automated tools to restore service? Yes Regulatory monitoring (0-1) 0 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on No reliability of supply? Financial deterrents aimed at limiting outages (0-1) 0 Does the utility either pay compensation to customers or face nes by the regulator (or both) if outages No exceed a certain cap? Communication of tari s and tari changes (0-1) 1 Are e ective tari s available online? Yes Link to the website, if available online https://www.ccit.hn/ wp- content/uploads/20 16/06/Tarifa- ENEE.pdf Are customers noti ed of a change in tari ahead of the billing cycle? Yes Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tari index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has ve dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The Page 25   Takes place simultaneously with previous procedure. Doing Business 2018 Honduras Details – Getting Electricity in Honduras – Measure of Quality Answer Reliability of supply and transparency of tari index (0-8) 0 Total duration and frequency of outages per customer a year (0-3) 0 System average interruption duration index (SAIDI) 257.0 System average interruption frequency index (SAIFI) 19.4 What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 5.0 Mechanisms for monitoring outages (0-1) 0 Does the distribution utility use automated tools to monitor outages? No Mechanisms for restoring service (0-1) 1 Does the distribution utility use automated tools to restore service? Yes Regulatory monitoring (0-1) 0 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on No reliability of supply? Financial deterrents aimed at limiting outages (0-1) 0 Does the utility either pay compensation to customers or face nes by the regulator (or both) if outages No exceed a certain cap? Communication of tari s and tari changes (0-1) 1 Are e ective tari s available online? Yes Link to the website, if available online https://www.ccit.hn/ wp- content/uploads/20 16/06/Tarifa- ENEE.pdf Are customers noti ed of a change in tari ahead of the billing cycle? Yes Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tari index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has ve dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. Page 26   If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Doing Business 2018 Honduras Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has ve dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on immovable To make the data comparable across economies, several assumptions property (number) about the parties to the transaction, the property and the procedures are used. Preregistration procedures (for example, checking for liens, notarizing sales agreement, The parties (buyer and seller): paying property transfer taxes) - Are limited liability companies (or the legal equivalent). Registration procedures in the economy's largest - Are located in the periurban area of the economy’s largest business city. business citya. For 11 economies the data are also collected for the second largest Postregistration procedures (for example, filling business city. title with municipality) - Are 100% domestically and privately owned. Time required to complete each procedure - Have 50 employees each, all of whom are nationals. (calendar days) - Perform general commercial activities. Does not include time spent gathering information The property (fully owned by the seller): - Has a value of 50 times income per capita, which equals the sale price. Each procedure starts on a separate day - though - Is fully owned by the seller. procedures that can be fully completed online - Has no mortgages attached and has been under the same ownership for are an exception to this rule the past 10 years. Procedure is considered completed once final - Is registered in the land registry or cadastre, or both, and is free of title document is received disputes. No prior contact with officials - Is located in a periurban commercial zone, and no rezoning is required. Cost required to complete each procedure (% of - Consists of land and a building. The land area is 557.4 square meters property value) (6,000 square feet). A two-story warehouse of 929 square meters (10,000 square feet) is located on the land. The warehouse is 10 years old, is in Official costs only (such as administrative fees, good condition, has no heating system and complies with all safety duties and taxes). standards, building codes and legal requirements. The property, Value Added Tax, Capital Gains Tax and illicit consisting of land and building, will be transferred in its entirety. payments are excluded - Will not be subject to renovations or additional construction following the Quality of land administration index (0-30) purchase. - Has no trees, natural water sources, natural reserves or historical Reliability of infrastructure index (0-8) monuments of any kind. Transparency of information index (0–6) - Will not be used for special purposes, and no special permits, such as for Geographic coverage index (0–8) residential use, industrial plants, waste storage or certain types of agricultural activities, are required. Land dispute resolution index (0–8) - Has no occupants, and no other party holds a legal interest in it. Equal access to property rights index (-2–0) Standard Property Transfer Property value HNL 2,512,976.10 City Covered Tegucigalpa Page 27   Latin America & OECD high Doing Business 2018 Honduras Standard Property Transfer Property value HNL 2,512,976.10 City Covered Tegucigalpa Latin America & OECD high Indicator Honduras Caribbean income Overall Best Performer Procedures (number) 6 7.2 4.6 1.00 (4 Economies) Time (days) 29 63.3 22.3 1.00 (3 Economies) Cost (% of property value) 5.7 5.8 4.2 0.00 (5 Economies) Quality of the land administration index (0-30) 14.0 12.0 22.7 29.00 (Singapore) Figure – Registering Property in Honduras and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 74.36: Costa Rica (Rank: 49) 71.34: Colombia (Rank: 60) 67.92: El Salvador (Rank: 69) 64.44: Guatemala (Rank: 85) 63.42: Honduras (Rank: 91) 55.36: Regional Average (Latin America & Caribbean) Note: The ranking of economies on the ease of registering property is determined by sorting their distance to frontier scores for registering property. These scores are the simple average of the distance to frontier scores for each of the component indicators. Figure – Registering Property in Honduras – Procedure, Time and Cost Time Cost 4.5 4 25 3.5 Cost (% of property value) 20 3 Time (days) 2.5 15 2 10 1.5 1 5 0.5 0 0 1 2 3 4 5 6 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Page 28   Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a di erent procedure list for registering property. These scores are the simple average of the distance to frontier scores for each of the component indicators. Doing Business 2018 Honduras Figure – Registering Property in Honduras – Procedure, Time and Cost Time Cost 4.5 4 25 3.5 Cost (% of property value) 20 3 Time (days) 2.5 15 2 10 1.5 1 5 0.5 0 0 1 2 3 4 5 6 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a di erent procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://www.doingbusiness.org/methodology). For details on the procedures re ected here, see the summary below. Figure – Registering Property in Honduras and comparator economies – Measure of Quality 20 17.5 18 16.5 16 14.0 13.5 14 13.0 12.0 Index score 12 10 8 6 4 2 0 Honduras Colombia Costa Rica El Salvador Guatemala Latin America & Caribbean Details – Registering Property in Honduras – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Veri cation of property background 1 day HNL 500 (HNL 300 for Agency : El Registro de la Propiedad Inmueble full certificate “certificación It is necessary to have the previous registration numbers to check: (i) who integra” + HNL 200 are the owners; (ii) if there have been any mortgages; or (iii) if the property for non- has been sold. The buyer can verify the property background at the on-line encumbrance Uni ed Registry System (SURE): http://www.ip.gob.hn/ certificate (http://www.sinap.hn/). However, in practice there are many problems with the SURE, so users tend to go to the registry. “certificado de libertad de gravamen”) 2 Veri cation that the municipal taxes have been paid 2 days no cost Page 29   Honduras Colombia Costa Rica El Salvador Guatemala Latin America & Caribbean Doing Business 2018 Honduras Details – Registering Property in Honduras – Procedure, Time and Cost No. Procedure Time to Complete Associated Costs 1 Veri cation of property background 1 day HNL 500 (HNL 300 for Agency : El Registro de la Propiedad Inmueble full certificate “certificación It is necessary to have the previous registration numbers to check: (i) who integra” + HNL 200 are the owners; (ii) if there have been any mortgages; or (iii) if the property for non- has been sold. The buyer can verify the property background at the on-line encumbrance Uni ed Registry System (SURE): http://www.ip.gob.hn/ certificate (http://www.sinap.hn/). However, in practice there are many problems with the SURE, so users tend to go to the registry. “certificado de libertad de gravamen”) 2 Veri cation that the municipal taxes have been paid 2 days no cost Agency : Dirección General de Catastro y Geografía (Alcaldia Municipal) The municipal tax number of the property is needed to check who is the registered owner of the land in the cadastre 3 The notary issues the deed (preliminary) 2 days 3-5% of transaction Agency : Notary price (Notary’s fees) After getting the legal documentation from the parties, the notary issues the preliminary deed (“escritura matriz”). Notary’s fees are usually calculated based on the market value of the property according to regulations setting minimum tari s. For properties with a value below HNL 25,000, the rate cannot be below HNL 1,000 while for properties with a higher value, the fee cannot be below 3% of the property value. Fees are negotiated between the notary and parties. 4 Payment at the bank of taxes and fees 1 day 1.5% of property Agency : Commercial Bank price (Transfer Tax) The transfer tax (1.5% of value of property, for urban property with improvements) must be paid at a bank. The taxes are calculated based on either the o cial value of the property (determined by the Cadastre for tax purposes) or the insured value, whichever is higher. With the introduction of the Property Law in 2004, the transfer tax was cut from 3 to 1.5%, the registration rights and the stamps were eliminated. 5 Registration at the Property registry 21 days HNL 200 for the first Agency : Property registry (“El Registro de la Propiedad Inmueble el cual HNL 1,000 of the depende del Instituto de Propiedad”) property value, and HNL 1.50 for each The new deed must be registered in the Property O ce by the notary. additional HNL 1,000 However, the notary might waive this right and leave to the responsibility to the applicants. 6 Register the change of ownership in the Cadastre o ce 2 days HNL 250 Agency : Dirección General de Catastro y Geografía The change of ownership must be registered in the Cadaster o ce ("Dirección General de Catastro y Geografía") by the notary or the buyer. The deed duly registered in Procedure 6 must be presented at the cadaster. Takes place simultaneously with previous procedure. Page 30   ("Dirección General de Catastro y Geografía") by the notary or the buyer. The deed duly registered in Procedure 6 must be presented at the cadaster. Doing Business 2018 Honduras Takes place simultaneously with previous procedure. Details – Registering Property in Honduras – Measure of Quality Answer Score Quality of the land administration index (0-30) 14.0 Reliability of infrastructure index (0-8) 4.0 What is the institution in charge of immovable property registration? Immovable Property Registry ("Registro de la Propiedad Inmueble") In what format are the majority of title or deed records kept in the largest business city Computer/Scann 1.0 —in a paper format or in a computerized format (scanned or fully digital)? ed Is there an electronic database for checking for encumbrances (liens, mortgages, Yes 1.0 restrictions and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: Cadastre ("Dirección General de Catastro y Geografía en el Instituto de la Propiedad") In what format are the majority of maps of land plots kept in the largest business city— Computer/Scann 1.0 in a paper format or in a computerized format (scanned or fully digital)? ed Page 31   Takes place simultaneously with previous procedure. Doing Business 2018 Honduras Details – Registering Property in Honduras – Measure of Quality Answer Score Quality of the land administration index (0-30) 14.0 Reliability of infrastructure index (0-8) 4.0 What is the institution in charge of immovable property registration? Immovable Property Registry ("Registro de la Propiedad Inmueble") In what format are the majority of title or deed records kept in the largest business city Computer/Scann 1.0 —in a paper format or in a computerized format (scanned or fully digital)? ed Is there an electronic database for checking for encumbrances (liens, mortgages, Yes 1.0 restrictions and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: Cadastre ("Dirección General de Catastro y Geografía en el Instituto de la Propiedad") In what format are the majority of maps of land plots kept in the largest business city— Computer/Scann 1.0 in a paper format or in a computerized format (scanned or fully digital)? ed Is there an electronic database for recording boundaries, checking plans and providing No 0.0 cadastral information (geographic information system)? Is the information recorded by the immovable property registration agency and the Di erent 1.0 cadastral or mapping agency kept in a single database, in di erent but linked databases databases but or in separate databases? linked Do the immovable property registration agency and cadastral or mapping agency use No 0.0 the same identi cation number for properties? Transparency of information index (0–6) 4.0 Who is able to obtain information on land ownership at the agency in charge of Freely accessible 1.0 immovable property registration in the largest business city? by anyone Is the list of documents that are required to complete any type of property transaction Yes, online 0.5 made publicly available–and if so, how? Link for online access: http://www.ip.go b.hn/sites/defaul t/ les/proceso_v entanilla_multipl e.pdf Is the applicable fee schedule for any property transaction at the agency in charge of Yes, online 0.5 immovable property registration in the largest business city made publicly available– and if so, how? Page 32   entanilla_multipl Doing Business 2018 Honduras e.pdf Is the applicable fee schedule for any property transaction at the agency in charge of Yes, online 0.5 immovable property registration in the largest business city made publicly available– and if so, how? Link for online access: http://www.ip.go b.hn/tasas_pago Does the agency in charge of immovable property registration commit to delivering a No 0.0 legally binding document that proves property ownership within a speci c time frame– and if so, how does it communicate the service standard? Link for online access: Is there a speci c and separate mechanism for ling complaints about a problem that Yes 1.0 occurred at the agency in charge of immovable property registration? Contact information: http://www.ip.go b.hn:8080/quejas /nuevaQueja.sea m Are there publicly available o cial statistics tracking the number of transactions at the No 0.0 immovable property registration agency? Number of property transfers in the largest business city in 2015: Who is able to consult maps of land plots in the largest business city? Anyone who 0.5 pays the o cial fee Is the applicable fee schedule for accessing maps of land plots made publicly available Yes, online 0.5 —and if so, how? Link for online access: Does the cadastral or mapping agency commit to delivering an updated map within a No 0.0 speci c time frame—and if so, how does it communicate the service standard? Link for online access: Is there a speci c and separate mechanism for ling complaints about a problem that No 0.0 occurred at the cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 0.0 Are all privately held land plots in the economy formally registered at the immovable No 0.0 property registry? Are all privately held land plots in the largest business city formally registered at the No 0.0 immovable property registry? Are all privately held land plots in the economy mapped? No 0.0 Are all privately held land plots in the largest business city mapped? No 0.0 Land dispute resolution index (0–8) 6.0 Does the law require that all property sale transactions be registered at the immovable Yes 1.5 Page 33   property registry to make them opposable to third parties? Land dispute Doing 2018 index resolution Business (0–8) Honduras 6.0 Does the law require that all property sale transactions be registered at the immovable Yes 1.5 property registry to make them opposable to third parties? Is the system of immovable property registration subject to a state or private Yes 0.5 guarantee? Is there a speci c compensation mechanism to cover for losses incurred by parties who No 0.0 engaged in good faith in a property transaction based on erroneous information certi ed by the immovable property registry? Does the legal system require a control of legality of the documents necessary for a Yes 0.5 property transaction (e.g., checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Notary. Does the legal system require veri cation of the identity of the parties to a property Yes 0.5 transaction? If yes, who is responsible for verifying the identity of the parties? Notary. Is there a national database to verify the accuracy of identity documents? Yes 1.0 For a standard land dispute between two local businesses over tenure rights of a El juzgado de property worth 50 times gross national income (GNI) per capita and located in the Letras de lo Civil largest business city, what court would be in charge of the case in the rst instance? How long does it take on average to obtain a decision from the rst-instance court for Between 1 and 2 2.0 such a case (without appeal)? years Are there any statistics on the number of land disputes in the rst instance? No 0.0 Number of land disputes in the largest business city in 2015: Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes 0.0 Do married men and married women have equal ownership rights to property? Yes 0.0 Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the e ectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions Rights of borrowers and lenders through through 2 sets of indicators. The depth of credit information index collateral laws (0-10) measures rules and practices a ecting the coverage, scope and Protection of secured creditors’ rights through accessibility of credit information available through a credit registry or a bankruptcy laws (0-2) credit bureau. The strength of legal rights index measures the degree to Depth of credit information index (0–8) which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first determined Scope and accessibility of credit information Page 34   whether a unitary secured transactions system exists. Then two case distributed by credit bureaus and credit Do married men and married women have equal ownership rights to property? Yes 0.0 Doing Business 2018 Honduras Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the e ectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions Rights of borrowers and lenders through through 2 sets of indicators. The depth of credit information index collateral laws (0-10) measures rules and practices a ecting the coverage, scope and Protection of secured creditors’ rights through accessibility of credit information available through a credit registry or a bankruptcy laws (0-2) credit bureau. The strength of legal rights index measures the degree to Depth of credit information index (0–8) which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first determined Scope and accessibility of credit information whether a unitary secured transactions system exists. Then two case distributed by credit bureaus and credit scenarios, case A and case B, are used to determine how a nonpossessory registries (0-8) security interest is created, publicized and enforced according to the law. Credit bureau coverage (% of adults) Special emphasis is given to how the collateral registry operates (if Number of individuals and firms listed in largest registration of security interests is possible). The case scenarios involve a credit bureau as a percentage of adult population secured borrower, company ABC, and a secured lender, BizBank. Credit registry coverage (% of adults) In some economies the legal framework for secured transactions will allow Number of individuals and firms listed in credit only case A or case B (not both) to apply. Both cases examine the same set registry as a percentage of adult population of legal provisions relating to the use of movable collateral. Several assumptions about the secured borrower (ABC) and lender (BizBank) are used: - ABC is a domestic limited liability company (or its legal equivalent). - ABC has up to 50 employees. - ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. - Both ABC and BizBank are 100% domestically owned. The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests). In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets. Latin America & OECD high Indicator Honduras Caribbean income Overall Best Performer Strength of legal rights index (0-12) 9 5.3 6.0 12.00 (4 Economies) Depth of credit information index (0-8) 8 4.8 6.6 8.00 (34 Economies) Page 35   Credit registry coverage (% of adults) 20.9 14.0 18.3 100.00 (3 Economies) possible). ABC keeps ownership and possession of the assets. Doing Business 2018 Honduras Latin America & OECD high Indicator Honduras Caribbean income Overall Best Performer Strength of legal rights index (0-12) 9 5.3 6.0 12.00 (4 Economies) Depth of credit information index (0-8) 8 4.8 6.6 8.00 (34 Economies) Credit registry coverage (% of adults) 20.9 14.0 18.3 100.00 (3 Economies) Credit bureau coverage (% of adults) 44.9 43.1 63.7 100.00 (23 Economies) Figure – Getting Credit in Honduras and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 95.00: Colombia (Rank: 2) 85.00: Costa Rica (Rank: 12) 85.00: Honduras (Rank: 12) 80.00: Guatemala (Rank: 20) 80.00: El Salvador (Rank: 20) 50.94: Regional Average (Latin America & Caribbean) Note: The ranking of economies on the ease of getting credit is determined by sorting their distance to frontier scores for getting credit. These scores are the distance to frontier score for the sum of the strength of legal rights index and the depth of credit information index. Figure – Legal Rights in Honduras and comparator economies 14 12 12 10 10 9 9 9 Index score 8 6 5.3 4 2 0 Honduras Colombia Costa Rica El Salvador Guatemala Latin America & Caribbean Details – Legal Rights in Honduras Strength of legal rights index (0-12) 9 Does an integrated or uni ed legal framework for secured transactions that extends to the creation, publicity and Yes enforcement of functional equivalents to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without Yes requiring a speci c description of collateral? Page 36   Honduras Colombia Costa Rica El Salvador Guatemala Latin America & Caribbean Doing Business 2018 Honduras Details – Legal Rights in Honduras Strength of legal rights index (0-12) 9 Does an integrated or uni ed legal framework for secured transactions that extends to the creation, publicity and Yes enforcement of functional equivalents to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without Yes requiring a speci c description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring Yes a speci c description of collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds Yes or replacements of the original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and Yes obligations be secured between parties; and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is uni ed geographically Yes and by asset type, with an electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? Yes Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be Yes performed online by any interested third party? Are secured creditors paid rst (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency No procedure? Are secured creditors paid rst (i.e. before tax claims and employee claims) when a business is liquidated? No Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised No reorganization procedure? Does the law protect secured creditors’ rights by providing clear grounds for relief from the stay and/or sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law Yes allow the secured creditor to sell the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Honduras and comparator economies 10 8 8 7 7 7 7 Index score 6 4.8 4 2 0 Honduras Colombia Costa Rica El Salvador Guatemala Latin America & Caribbean Details – Credit Information in Honduras Page 37   0 Honduras Doing Business 2018 Colombia Honduras Costa Rica El Salvador Guatemala Latin America & Caribbean Details – Credit Information in Honduras Credit Credit Depth of credit information index (0-8) bureau registry Score Are data on both firms and individuals distributed? Yes Yes 1 Are both positive and negative credit data distributed? Yes Yes 1 Are data from retailers or utility companies - in addition to data from banks and financial institutions - Yes No 1 distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries that distribute more Yes Yes 1 than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? Yes Yes 1 By law, do borrowers have the right to access their data in the credit bureau or credit registry? Yes Yes 1 Can banks and financial institutions access borrowers’ credit information online (for example, Yes Yes 1 through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help banks and financial Yes No 1 institutions assess the creditworthiness of borrowers? Score ("yes" to either public bureau or private registry) 8 Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 2,598,670 1,206,968 Number of firms 22,883 11,650 Total 2,621,553 1,218,618 Percentage of adult population 44.9 20.9 Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Extent of disclosure index (0–10): Review and To make the data comparable across economies, a case study uses several approval requirements for related-party assumptions about the business and the transaction. transactions; Disclosure requirements for related-party transactions The business (Buyer): Extent of director liability index (0–10): Ability of - Is a publicly traded corporation listed on the economy’s most important minority shareholders to sue and hold interested stock exchange. If the number of publicly traded companies listed on that directors liable for prejudicial related-party exchange is less than 10, or if there is no stock exchange in the economy, it is assumed that Buyer is a large private company with multiple Page 38   transactions; Available legal remedies (damages, Percentage of adult population 44.9 20.9 Doing Business 2018 Honduras Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Extent of disclosure index (0–10): Review and To make the data comparable across economies, a case study uses several approval requirements for related-party assumptions about the business and the transaction. transactions; Disclosure requirements for related-party transactions The business (Buyer): Extent of director liability index (0–10): Ability of - Is a publicly traded corporation listed on the economy’s most important minority shareholders to sue and hold interested stock exchange. If the number of publicly traded companies listed on that directors liable for prejudicial related-party exchange is less than 10, or if there is no stock exchange in the economy, it transactions; Available legal remedies (damages, is assumed that Buyer is a large private company with multiple disgorgement of profits, fines, imprisonment, shareholders. rescission of the transaction) - Has a board of directors and a chief executive o cer (CEO) who may legally act on behalf of Buyer where permitted, even if this is not speci cally Ease of shareholder suits index (0–10): Access to required by law. internal corporate documents; Evidence - Has a supervisory board (applicable to economies with a two-tier board obtainable during trial and allocation of legal system) on which 60% of the shareholder-elected members have been expenses appointed by Mr. James, who is Buyer’s controlling shareholder and a Extent of conflict of interest regulation index member of Buyer’s board of directors. (0–10): Simple average of the extent of disclosure, - Has not adopted any bylaws or articles of association that di er from extent of director liability and ease of default minimum standards and does not follow any nonmandatory codes, shareholder indices principles, recommendations or guidelines relating to corporate Extent of shareholder rights index (0-10): governance. Shareholders’ rights and role in major corporate - Is a manufacturing company with its own distribution network. decisions Extent of ownership and control index (0-10): The transaction involves the following details: Governance safeguards protecting shareholders - Mr. James owns 60% of Buyer and elected two directors to Buyer’s ve- from undue board control and entrenchment member board. Extent of corporate transparency index (0-10): - Mr. James also owns 90% of Seller, a company that operates a chain of Corporate transparency on ownership stakes, retail hardware stores. Seller recently closed a large number of its stores. compensation, audits and financial prospects - Mr. James proposes that Buyer purchase Seller’s unused eet of trucks to expand Buyer’s distribution of its food products, a proposal to which Buyer Extent of shareholder governance index (0–10): agrees. The price is equal to 10% of Buyer’s assets and is higher than the Simple average of the extent of shareholders market value. rights, extent of ownership and control and - The proposed transaction is part of the company’s ordinary course of extent of corporate transparency indices business and is not outside the authority of the company. Strength of minority investor protection index - Buyer enters into the transaction. All required approvals are obtained, (0–10): Simple average of the extent of conflict of and all required disclosures made (that is, the transaction is not interest regulation and extent of shareholder fraudulent). governance indices - The transaction causes damages to Buyer. Shareholders sue Mr. James and the other parties that approved the transaction. Latin America & OECD high Indicator Honduras Caribbean income Overall Best Performer Extent of conflict of interest regulation index (0- 5.7 5.3 6.4 9.3 (New Zealand) 10) Extent of shareholder governance index (0-10) 3.3 4.1 6.4 Page 39   9.00 (Kazakhstan) and the other parties that approved the transaction. Doing Business 2018 Honduras Latin America & OECD high Indicator Honduras Caribbean income Overall Best Performer Extent of conflict of interest regulation index (0- 5.7 5.3 6.4 9.3 (New Zealand) 10) Extent of shareholder governance index (0-10) 3.3 4.1 6.4 9.00 (Kazakhstan) Figure – Protecting Minority Investors in Honduras and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 73.33: Colombia (Rank: 16) 48.33: Costa Rica (Rank: 119) 47.24: Regional Average (Latin America & Caribbean) 45.00: Honduras (Rank: 129) 38.33: El Salvador (Rank: 160) 31.67: Guatemala (Rank: 172) Note: The ranking of economies on the strength of minority investor protections is determined by sorting their distance to frontier scores for protecting minority investors. These scores are the simple average of the distance to frontier scores for the extent of con ict of interest regulation index and the extent of shareholder governance index. Figure – Protecting Minority Investors in Honduras and comparator economies – Measure of Quality Honduras 3 8 3 2 5 6 Colombia 6 7 9 8 6 8 Costa Rica 3 5 5 4 4 8 El Salvador 6 0 3 1 6 7 Guatemala 3 2 3 1 5 5 OECD high income 7.3 5.6 6.5 5.2 6.3 7.4 Latin America & Caribbean 4.1 5.4 4.4 3.4 5.6 6.5 0 5 10 15 20 25 30 35 40 45 50 Sub-Indicator Score Extent of corporate transparency index (0­10) Extent of director liability index (0­10) Extent of disclosure index (0­10) Extent of ownership and control index (0­10) Extent of shareholder rights index (0­10) Ease of shareholder suits index (0­10) Details – Protecting Minority Investors in Honduras – Measure of Quality Answer Score Page 40   Extent of ownership and control index (0­10) Extent of shareholder rights index (0­10) Ease of shareholder suits index (0­10) Doing Business 2018 Honduras Details – Protecting Minority Investors in Honduras – Measure of Quality Answer Score Extent of con ict of interest regulation index (0-10) 5.7 Extent of disclosure index (0-10) 3 Which corporate body is legally su cient to approve the Buyer-Seller transaction? (0-3) Shareholders 3.0 excluding interested parties Must an external body review the terms of the transaction before it takes place? (0-1) No 0.0 Must Mr. James disclose his con ict of interest to the board of directors? (0-2) No disclosure 0.0 obligation Must Buyer disclose the transaction in published periodic lings (annual reports)? (0-2) No disclosure 0.0 obligation Must Buyer immediately disclose the transaction to the public and/or shareholders? (0- No disclosure 0.0 2) obligation Extent of director liability index (0-10) 8 Can shareholders representing 10% of Buyer's share capital sue directly or derivatively Yes 1.0 for the damage the transaction caused to Buyer? (0-1) Can shareholders hold the interested director liable for the damage the transaction Liable if negligent 1.0 caused to Buyer? (0-2) Can shareholders hold the other directors liable for the damage the transaction caused Liable if negligent 1.0 to Buyer (0-2) Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by Yes 1.0 shareholders? (0-1) Must Mr. James repay pro ts made from the transaction upon a successful claim by Yes 1.0 shareholders? (0-1) Is Mr. James disquali ed or ned and imprisoned upon a successful claim by Yes 1.0 shareholders? (0-1) Can a court void the transaction upon a successful claim by shareholders? (0-2) Voidable if unfair 2.0 or prejudicial Ease of shareholder suits index (0-10) 6 Before suing can shareholders representing 10% of Buyer's share capital inspect the Yes 1.0 transaction documents? (0-1) Can the plainti obtain any documents from the defendant and witnesses at trial? (0-3) Any relevant 3.0 document Can the plainti request categories of documents from the defendant without No 0.0 identifying speci c ones? (0-1) Can the plainti directly question the defendant and witnesses at trial? (0-2) Preapproved 1.0 questions only Page 41   Can the plainti request categories of documents from the defendant without No 0.0 identifying Doing Business c ones? Honduras speci 2018 (0-1) Can the plainti directly question the defendant and witnesses at trial? (0-2) Preapproved 1.0 questions only Is the level of proof required for civil suits lower than that of criminal cases? (0-1) No 0.0 Can shareholder plainti s recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-10) 3.3 Extent of shareholder rights index (0-10) 5 Does the sale of 51% of Buyer's assets require shareholder approval? No 0.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of No 0.0 shareholders? Must Buyer obtain its shareholders’ approval every time it issues new shares? Yes 1.0 Do shareholders automatically receive preemption rights every time Buyer issues new Yes 1.0 shares? Must shareholders approve the election and dismissal of the external auditor? No 0.0 Are changes to the rights of a class of shares only possible if the holders of the a ected Yes 1.0 shares approve? Assuming that Buyer is a limited company, does the sale of 51% of its assets require No 0.0 member approval? Assuming that Buyer is a limited company, can members representing 10% call for a No 0.0 meeting of members? Assuming that Buyer is a limited company, must all members consent to add a new Yes 1.0 member? Assuming that Buyer is a limited company, must a member rst o er to sell their Yes 1.0 interest to the existing members before they can sell to non-members? Extent of ownership and control index (0-10) 2 Is it forbidden to appoint the same individual as CEO and chair of the board of No 0.0 directors? Must the board of directors include independent and nonexecutive board members? No 0.0 Can shareholders remove members of the board of directors without cause before the Yes 1.0 end of their term? Must the board of directors include a separate audit committee exclusively comprising No 0.0 board members? Must a potential acquirer make a tender o er to all shareholders upon acquiring 50% No 0.0 of Buyer? Must Buyer pay declared dividends within a maximum period set by law? No 0.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? No 0.0 Assuming that Buyer is a limited company, must Buyer have a mechanism to resolve Yes 1.0 disagreements among members? Page 42   Is a subsidiary Doing Business prohibited from acquiring shares issued by its parent company? 2018 Honduras No 0.0 Assuming that Buyer is a limited company, must Buyer have a mechanism to resolve Yes 1.0 disagreements among members? Assuming that Buyer is a limited company, must a potential acquirer make a tender No 0.0 o er to all shareholders upon acquiring 50% of Buyer? Assuming that Buyer is a limited company, must Buyer distribute pro ts within a No 0.0 maximum period set by law? Extent of corporate transparency index (0-10) 3 Must Buyer disclose direct and indirect bene cial ownership stakes representing 5%? No 0.0 Must Buyer disclose information about board members’ primary employment and No 0.0 directorships in other companies? Must Buyer disclose the compensation of individual managers? No 0.0 Must a detailed notice of general meeting be sent 21 days before the meeting? No 0.0 Can shareholders representing 5% of Buyer’s share capital put items on the general Yes 1.0 meeting agenda? Must Buyer's annual nancial statements be audited by an external auditor? No 0.0 Must Buyer disclose its audit reports to the public? No 0.0 Assuming that Buyer is a limited company, must members meet at least once a year? Yes 1.0 Assuming that Buyer is a limited company, can members representing 5% put items on Yes 1.0 the meeting agenda? Assuming that Buyer is a limited company, must Buyer's annual nancial statements be No 0.0 audited by an external auditor? Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as measures the administrative burden in paying taxes and contributions. The most recent round of data collection for the project was completed on June 30, 2017 covering for the Paying Taxes indicator calendar year 2016 (January 1, 2016 – December 31, 2016). Last year (Doing Business 2017) the scope of data collection was expanded to better understand the overall tax environment in an economy. The questionnaire was expanded to include new questions on post- ling processes: VAT refund and tax audit. The data shows where post ling processes and practices work e ciently and what drives the di erences in the overall tax compliance cost across economies. The new section covers both the legal framework and the administrative burden on businesses to comply with post ling processes. See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in Using a case scenario, Doing Business records taxes and mandatory 2016 (number per year adjusted for electronic and contributions a medium size company must pay in a year, and measures joint ling and payment) the administrative burden of paying taxes, contributions and dealing with post ling processes. Information is also compiled on frequency of ling Total number of taxes and contributions paid, and payments, time taken to comply with tax laws, time taken to comply including consumption taxes (value added tax, with the requirements of post ling processes and time waiting. sales tax or goods and service tax) Page 43   Method and frequency of filing and payment To make data comparable across economies, several assumptions are Assuming that Buyer is a limited company, must Buyer's annual nancial statements be No 0.0 audited by an external auditor? Doing Business 2018 Honduras Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as measures the administrative burden in paying taxes and contributions. The most recent round of data collection for the project was completed on June 30, 2017 covering for the Paying Taxes indicator calendar year 2016 (January 1, 2016 – December 31, 2016). Last year (Doing Business 2017) the scope of data collection was expanded to better understand the overall tax environment in an economy. The questionnaire was expanded to include new questions on post- ling processes: VAT refund and tax audit. The data shows where post ling processes and practices work e ciently and what drives the di erences in the overall tax compliance cost across economies. The new section covers both the legal framework and the administrative burden on businesses to comply with post ling processes. See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in Using a case scenario, Doing Business records taxes and mandatory 2016 (number per year adjusted for electronic and contributions a medium size company must pay in a year, and measures joint ling and payment) the administrative burden of paying taxes, contributions and dealing with post ling processes. Information is also compiled on frequency of ling Total number of taxes and contributions paid, and payments, time taken to comply with tax laws, time taken to comply including consumption taxes (value added tax, with the requirements of post ling processes and time waiting. sales tax or goods and service tax) Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: Time required to comply with 3 major taxes - TaxpayerCo is a medium-size business that started operations on January (hours per year) 1, 2015. It produces ceramic flowerpots and sells them at retail. All taxes Collecting information, computing tax payable and contributions recorded are paid in the second year of operation Completing tax return, filing with agencies (calendar year 2016). Taxes and mandatory contributions are measured at all levels of government. Arranging payment or withholding Preparing separate tax accounting books, if The VAT refund process: required - In June 2016, TaxpayerCo. makes a large capital purchase: the value of the Total tax and contribution rate (% of pro t before machine is 65 times income per capita of the economy. Sales are equally all taxes) spread per month (1,050 times income per capita divided by 12) and cost of goods sold are equally expensed per month (875 times income per Profit or corporate income tax capita divided by 12). The machinery seller is registered for VAT and excess Social contributions, labor taxes paid by input VAT incurred in June will be fully recovered after four consecutive employer months if the VAT rate is the same for inputs, sales and the machine and Property and property transfer taxes the tax reporting period is every month. Input VAT will exceed Output VAT Dividend, capital gains, financial transactions in June 2016. taxes The corporate income tax audit process: Waste collection, vehicle, road and other taxes - An error in calculation of income tax liability (for example, use of incorrect Post ling Index tax depreciation rates, or incorrectly treating an expense as tax deductible) leads to an incorrect income tax return and a corporate income Time to comply with a VAT refund tax underpayment. TaxpayerCo. discovered the error and voluntarily Time to receive a VAT refund noti ed the tax authority. The value of the underpaid income tax liability is Time to comply with a corporate income tax audit 5% of the corporate income tax liability due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax Time to complete a corporate income tax audit return, but within the tax assessment period. Latin America & OECD high Indicator Honduras Caribbean income Overall Best Performer Payments (number per year) 48 28.0 10.9 3 (Hong Kong SAR, China) Page 44   return, but within the tax assessment period. Doing Business 2018 Honduras Latin America & OECD high Indicator Honduras Caribbean income Overall Best Performer Payments (number per year) 48 28.0 10.9 3 (Hong Kong SAR, China) Time (hours per year) 224 332.1 160.7 55 (Luxembourg) Total tax and contribution rate (% of profit) 44.4 46.6 40.1 18.47% (32 Economies) Postfiling index (0-100) 35.14 47.50 83.45 99.38 (Estonia) Figure – Paying Taxes in Honduras and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 77.46: Costa Rica (Rank: 60) 77.35: El Salvador (Rank: 61) 70.30: Guatemala (Rank: 100) 60.16: Regional Average (Latin America & Caribbean) 59.08: Colombia (Rank: 142) 51.74: Honduras (Rank: 164) Note: The ranking of economies on the ease of paying taxes is determined by sorting their distance to frontier scores on the ease of paying taxes. These scores are the simple average of the distance to frontier scores for each of the four component indicators – number of tax payments. time, total tax rate and post ling index – with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax rate. The nonlinear distance to frontier for the total tax rate is equal to the distance to frontier for the total tax rate to the power of 0.8. The threshold is de ned as the total tax rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax rate below this threshold receive the same score as the economy at the threshold. Figure – Paying Taxes in Honduras and comparator economies – Measure of Quality 90 85.06 80 70 60 Index score 48.17 49.54 47.50 50 40 35.14 33.04 30 20 10 0 Honduras Colombia Costa Rica El Salvador Guatemala Latin America & Caribbean Details – Paying Taxes in Honduras Total tax and contribution Tax or mandatory Payments Notes on Time rate (% of Notes contribution (number) Payments (hours) Statutory tax rate Tax base profit) TTR onPage 45   Doing Business 2018 Honduras Figure – Paying Taxes in Honduras and comparator economies – Measure of Quality 90 85.06 80 70 60 Index score 48.17 49.54 47.50 50 40 35.14 33.04 30 20 10 0 Honduras Colombia Costa Rica El Salvador Guatemala Latin America & Caribbean Details – Paying Taxes in Honduras Total tax and contribution Tax or mandatory Payments Notes on Time rate (% of Notes contribution (number) Payments (hours) Statutory tax rate Tax base profit) on TTR Corporate income 4 35 25% or 1.5% taxable profit 26.52 tax or gross income Municipal tax on 1 0.4% sales 7.07 industry and commerce Solidarity tax 0 jointly 5% taxable profit 4.11 over Lps 1,000,000 Fixed assets tax 1 1% over Lps 3,000,000 assets value 2.14 Employer paid - 0 1.5% gross 1.69 Pension salaries contribution - RAP Employer paid - 1 1% gross 1.13 Professional salaries training tax - INFOP Municipal 12 Lps 3.5 per 1,000 property 0.53 property tax value Capital gains tax 1 10% capital gains 0.51 Employer paid - 12 93 7.2%, 8% gross 0.44 Social security salaries contributions Tax on interest 1 10% if above 50,000 interest 0.19 Vehicle tax 1 Lps 2,200 fixed fee 0.03 Value added tax 12 96 15% value added 0.00 not Page 46   (VAT) included tax Vehicle Business Doing 1 2018 Honduras Lps 2,200 fixed fee 0.03 Value added tax 12 96 15% value added 0.00 not (VAT) included Stamp duty 1 Lps 200 for contracts with a transaction 0.00 small value less than 1,000 and Lps value amount 1.5 per 1,000 of value of transaction Employee paid - 0 jointly 5% gross 0.00 withheld Social security salaries contributions Fuel tax 1 $0.6106 per gallon fuel 0.00 consumption Totals 48 224 44.4 Details – Paying Taxes in Honduras – Tax by Type Taxes by type Answer Profit tax (% of profit) 31.1 Labor tax and contributions (% of profit) 3.3 Other taxes (% of profit) 10.0 Details – Paying Taxes in Honduras – Measure of Quality Answer Score Post ling index (0-100) 35.14 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? Yes Restrictions on VAT refund process None Percentage of cases exposed to a VAT audit (%) 50% - 74% Is there a mandatory carry forward period? No Time to comply with VAT refund (hours) 33.0 34 Time to obtain a VAT refund (weeks) 54.5 1.06 Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 25% - 49% Time to comply with a corporate income tax audit (hours) 17.0 71.56 Page 47   Percentage Doing of cases Business 2018exposed to a corporate income tax audit (%) Honduras 25% - 49% Time to comply with a corporate income tax audit (hours) 17.0 71.56 Time to complete a corporate income tax audit (weeks) 21.1 33.93 Notes: Names of taxes have been standardized. For instance income tax, pro t tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The post ling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax audit and time to complete a corporate income tax audit. N/A = Not applicable. Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tari s) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. Given the importance of trade digitalization, in Doing Business 2018, the Trading across Borders questionnaire included research questions on the availability and status of implementation of Electronic Data Interchange (EDI) and Single Window (SW) systems. With this information, Doing Business built a comprehensive dataset on the adoption and level of sophistication of electronic platforms in 190 economies. These data are not used to compute the distance to frontier score or ranking of the ease of doing business. The new dataset on EDI and SW systems is available here. What the indicators measure Case study assumptions Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: Obtaining, preparing and submitting documents during transport, clearance, inspections and port Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 or border handling in origin economy days are recorded as 22×24=528 hours). If customs clearance takes 7.5 Obtaining, preparing and submitting documents hours, the data are recorded as is. Alternatively, suppose documents are required by destination economy and any transit submitted to a customs agency at 8:00a.m., are processed overnight and economies can be picked up at 8:00a.m. the next day. The time for customs clearance Covers all documents required by law and in would be recorded as 24 hours because the actual procedure took 24 practice, including electronic submissions of hours. information Border compliance Cost: Insurance cost and informal payments for which no receipt is issued are excluded from the costs recorded. Costs are reported in U.S. dollars. Customs clearance and inspections Contributors are asked to convert local currency into U.S. dollars based on Inspections by other agencies (if applied to more the exchange rate prevailing on the day they answer the questionnaire. than 20% of shipments) Contributors are private sector experts in international trade logistics and Handling and inspections that take place at the are informed about exchange rates. economy’s port or border Assumptions of the case study: - For all 190 economies covered by Doing Domestic transport Business, it is assumed a shipment is in a warehouse in the largest Loading or unloading of the shipment at the business city of the exporting economy and travels to a warehouse in the warehouse or port/border largest business city of the importing economy. - It is assumed each Transport between warehouse and port/border economy imports 15 metric tons of containerized auto parts (HS 8708) Traffic delays and road police checks while from its natural import partner—the economy from which it imports the largest value (price times quantity) of auto parts. It is assumed each shipment is en route economy exports the product of its comparative advantage (de ned by the largest export value) to its natural export partner—the economy that is the largest purchaser of this product. Shipment value is assumed to be $50,000. - The mode of transport is the one most widely used for the Page 48   chosen export or import product and the trading partner, as is the a corporate income tax audit and time to complete a corporate income tax audit. N/A = Not applicable. Doing Business 2018 Honduras Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tari s) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. Given the importance of trade digitalization, in Doing Business 2018, the Trading across Borders questionnaire included research questions on the availability and status of implementation of Electronic Data Interchange (EDI) and Single Window (SW) systems. With this information, Doing Business built a comprehensive dataset on the adoption and level of sophistication of electronic platforms in 190 economies. These data are not used to compute the distance to frontier score or ranking of the ease of doing business. The new dataset on EDI and SW systems is available here. What the indicators measure Case study assumptions Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: Obtaining, preparing and submitting documents during transport, clearance, inspections and port Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 or border handling in origin economy days are recorded as 22×24=528 hours). If customs clearance takes 7.5 Obtaining, preparing and submitting documents hours, the data are recorded as is. Alternatively, suppose documents are required by destination economy and any transit submitted to a customs agency at 8:00a.m., are processed overnight and economies can be picked up at 8:00a.m. the next day. The time for customs clearance Covers all documents required by law and in would be recorded as 24 hours because the actual procedure took 24 practice, including electronic submissions of hours. information Border compliance Cost: Insurance cost and informal payments for which no receipt is issued are excluded from the costs recorded. Costs are reported in U.S. dollars. Customs clearance and inspections Contributors are asked to convert local currency into U.S. dollars based on Inspections by other agencies (if applied to more the exchange rate prevailing on the day they answer the questionnaire. than 20% of shipments) Contributors are private sector experts in international trade logistics and Handling and inspections that take place at the are informed about exchange rates. economy’s port or border Assumptions of the case study: - For all 190 economies covered by Doing Domestic transport Business, it is assumed a shipment is in a warehouse in the largest Loading or unloading of the shipment at the business city of the exporting economy and travels to a warehouse in the warehouse or port/border largest business city of the importing economy. - It is assumed each Transport between warehouse and port/border economy imports 15 metric tons of containerized auto parts (HS 8708) Traffic delays and road police checks while from its natural import partner—the economy from which it imports the largest value (price times quantity) of auto parts. It is assumed each shipment is en route economy exports the product of its comparative advantage (de ned by the largest export value) to its natural export partner—the economy that is the largest purchaser of this product. Shipment value is assumed to be $50,000. - The mode of transport is the one most widely used for the chosen export or import product and the trading partner, as is the seaport, or land border crossing. - All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process. - A port or border is a place (seaport, airport or land border crossing) where merchandise can enter or leave an economy. - Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities. Page 49   of agriculture or industry, national security agencies and any other Doing Business 2018 Honduras government authorities. Latin America & OECD high Indicator Honduras Caribbean income Overall Best Performer Time to export: Border compliance (hours) 88 62.5 12.7 0 (17 Economies) Cost to export: Border compliance (USD) 601 526.5 149.9 0.00 (19 Economies) Time to export: Documentary compliance 48 53.3 2.4 1.0 (25 Economies) (hours) Cost to export: Documentary compliance (USD) 80 110.4 35.4 0.00 (19 Economies) Time to import: Border compliance (hours) 96 64.4 8.7 0.00 (21 Economies) Cost to import: Border compliance (USD) 483 684.0 111.6 0.00 (27 Economies) Time to import: Documentary compliance 72 79.9 3.5 1.0 (30 Economies) (hours) Cost to import: Documentary compliance (USD) 70 119.5 25.6 0.00 (30 Economies) Figure – Trading across Borders in Honduras and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 89.29: El Salvador (Rank: 43) 79.32: Costa Rica (Rank: 73) 75.31: Guatemala (Rank: 79) 68.71: Regional Average (Latin America & Caribbean) 65.85: Honduras (Rank: 115) 62.83: Colombia (Rank: 125) Note: The ranking of economies on the ease of trading across borders is determined by sorting their distance to frontier scores for trading across borders. These scores are the simple average of the distance to frontier scores for the time and cost for documentary compliance and border compliance to export and import (domestic transport is not used for calculating the ranking). Figure – Trading across Borders in Honduras – Time and Cost Time Cost 120 700 601 100 96 600 88 483 500 80 72 Time (hours) Cost (USD) 400 60 48 300 40 200 20 80 70 100 0 0 Export - Border Compliance Export - Documentary Compliance Import - Border Compliance Import - Documentary CompliancePage 50   Doing Business 2018 Honduras Figure – Trading across Borders in Honduras – Time and Cost Time Cost 120 700 601 100 96 600 88 483 500 80 72 Time (hours) Cost (USD) 400 60 48 300 40 200 20 80 70 100 0 0 Export - Border Compliance Export - Documentary Compliance Import - Border Compliance Import - Documentary Compliance Details – Trading across Borders in Honduras Characteristics Export Import Product HS 09 : Coffee, tea, matï and spices HS 8708: Parts and accessories of motor vehicles Trade partner Germany United States Border Puerto Cortés port Puerto Cortés port Distance (km) 172 172 Domestic transport time (hours) 6 6 Domestic transport cost (USD) 1250 1250 Details – Trading across Borders in Honduras – Components of Border Compliance Time to Complete Associated Costs (hours) (USD) Export: Clearance and inspections required by customs authorities 15.0 190.0 Export: Clearance and inspections required by agencies other than customs 72.0 265.0 Export: Port or border handling 16.0 146.3 Import: Clearance and inspections required by customs authorities 96.0 215.0 Import: Clearance and inspections required by agencies other than customs 0.0 0.0 Import: Port or border handling 96.0 267.8 Details – Trading across Borders in Honduras – Trade Documents Export Import Customs Export Declaration Customs Import Declaration Phytosanitary Certificate Commercial Invoice Page 51   Domestic transport cost (USD) 1250 1250 Doing Business 2018 Honduras Details – Trading across Borders in Honduras – Components of Border Compliance Time to Complete Associated Costs (hours) (USD) Export: Clearance and inspections required by customs authorities 15.0 190.0 Export: Clearance and inspections required by agencies other than customs 72.0 265.0 Export: Port or border handling 16.0 146.3 Import: Clearance and inspections required by customs authorities 96.0 215.0 Import: Clearance and inspections required by agencies other than customs 0.0 0.0 Import: Port or border handling 96.0 267.8 Details – Trading across Borders in Honduras – Trade Documents Export Import Customs Export Declaration Customs Import Declaration Phytosanitary Certificate Commercial Invoice IHCAFE (Hondutas Coffee Institute) CO Packing List IHCAFE Export Certificate Cargo Release Order OIC (Organizacion Internacional del Cafe/Coffee International Ass.) Export Certificate Terminal Handling Receipts Foreign Exchange Authorization Certificate of Origin Commercial Invoice Bill of Lading Packing List SOLAS certificate Bill of Lading SOLAS certificate Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local rst-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and e ciency in the court system. The most recent round of data collection was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the The dispute in the case study involves the breach of a sales contract courts (calendar days) between 2 domestic businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes Time to file and serve the case the case from simple debt enforcement. Time for trial and to obtain the judgment To make the data comparable across economies, Doing Business uses Page 52   Time to enforce the judgment several assumptions about the case: SOLAS certificate Doing Business 2018 Honduras Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local rst-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and e ciency in the court system. The most recent round of data collection was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the The dispute in the case study involves the breach of a sales contract courts (calendar days) between 2 domestic businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes Time to file and serve the case the case from simple debt enforcement. Time for trial and to obtain the judgment To make the data comparable across economies, Doing Business uses Time to enforce the judgment several assumptions about the case: Cost required to enforce a contract through the - The dispute concerns a lawful transaction between two businesses (Seller courts (% of claim) and Buyer), both located in the economy’s largest business city. For 11 Attorney fees economies the data are also collected for the second largest business city. - The buyer orders custom-made goods, then fails to pay. Court fees - The value of the dispute is 200% of the income per capita or the Enforcement fees equivalent in local currency of USD 5,000, whichever is greater. Quality of judicial processes index (0-18) - The seller sues the buyer before the court with jurisdiction over commercial cases worth 200% of income per capita or $5,000. Court structure and proceedings (-1-5) - The seller requests a pretrial attachment to secure the claim. Case management (0-6) - The dispute on the quality of the goods requires an expert opinion. Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. Alternative dispute resolution (0-3) - The seller enforces the judgment through a public sale of the buyer’s movable assets. Standardized Case Claim value HNL 112,956.00 Court name Unified Civil District Court of Francisco Morazán City Covered Tegucigalpa Latin America & OECD high Indicator Honduras Caribbean income Overall Best Performer Time (days) 920 767.1 577.8 164.00 (Singapore) Cost (% of claim value) 35.2 31.4 21.5 9.00 (Iceland) Quality of judicial processes index (0-18) 7.5 8.4 11.0 15.50 (Australia) Figure – Enforcing Contracts in Honduras and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 55.20: El Salvador (Rank: 105) 53.13: Regional Average (Latin America & Caribbean) 51.48: Costa Rica (Rank: 129) Page 53   of judicial processes Quality Business Doing index (0-18) 2018 Honduras 7.5 8.4 11.0 15.50 (Australia) Figure – Enforcing Contracts in Honduras and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 55.20: El Salvador (Rank: 105) 53.13: Regional Average (Latin America & Caribbean) 51.48: Costa Rica (Rank: 129) 45.54: Honduras (Rank: 152) 34.55: Guatemala (Rank: 176) 34.29: Colombia (Rank: 177) Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their distance to frontier scores for enforcing contracts. These scores are the simple average of the distance to frontier scores for each of the component indicators. Figure – Enforcing Contracts in Honduras – Time and Cost Time Cost 1600 45.8 50 1402 1400 1288 Cost (% of claim value) 35.2 40 1200 31.4 Time (days) 1000 920 852 26.5 30 24.3 786 767.1 800 21.5 19.2 577.8 600 20 400 10 200 0 0 Colombia Costa Rica El Salvador Guatemala Honduras Latin America & OECD high income Caribbean Figure – Enforcing Contracts in Honduras and comparator economies – Measure of Quality Honduras 2.5 2 0 3 Colombia 2.5 1.5 1.5 3.5 Costa Rica 2.5 1.5 1 2.5 El Salvador 2.5 2 0.5 2.5 Guatemala 2 0.5 0.5 3 OECD high income 2.5 2.9 2 3.6 Latin America & Caribbean 2.4 2 0.9 3.5 0 2 4 6 8 10 Page 54   12 Colombia Costa Rica El Salvador Guatemala Honduras Latin America & OECD high income Caribbean Doing Business 2018 Honduras Figure – Enforcing Contracts in Honduras and comparator economies – Measure of Quality Honduras 2.5 2 0 3 Colombia 2.5 1.5 1.5 3.5 Costa Rica 2.5 1.5 1 2.5 El Salvador 2.5 2 0.5 2.5 Guatemala 2 0.5 0.5 3 OECD high income 2.5 2.9 2 3.6 Latin America & Caribbean 2.4 2 0.9 3.5 0 2 4 6 8 10 12 Sub-Indicator Score Alternative dispute resolution (0­3) Case management (0­6) Court automation (0­4) Court structure and proceedings (­1­5) Details – Enforcing Contracts in Honduras Indicator Time (days) 920 Filing and service 60 Trial and judgment 680 Enforcement of judgment 180 Cost (% of claim value) 35.2 Attorney fees 25 Court fees 2.1 Enforcement fees 8.1 Quality of judicial processes index (0-18) 7.5 Court structure and proceedings (-1-5) 3.0 Case management (0-6) 2.0 Court automation (0-4) 0.0 Alternative dispute resolution (0-3) 2.5 Details – Enforcing Contracts in Honduras – Measure of Quality Page 55   Alternative dispute resolution (0-3) 2.5 Doing Business 2018 Honduras Details – Enforcing Contracts in Honduras – Measure of Quality Answer Score Quality of judicial processes index (0-18) 7.5 Court structure and proceedings (-1-5) 3.0 1. Is there a court or division of a court dedicated solely to hearing commercial cases? No 0.0 2. Small claims court 1.5 2.a. Is there a small claims court or a fast-track procedure for small claims? Yes 2.b. If yes, is self-representation allowed? Yes 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? Yes, but manual 0.5 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 2.0 1. Time standards 1.0 1.a. Are there laws setting overall time standards for key court events in a civil case? Yes 1.b. If yes, are the time standards set for at least three court events? Yes 1.c. Are these time standards respected in more than 50% of cases? Yes 2. Adjournments 0.0 2.a. Does the law regulate the maximum number of adjournments that can be No granted? 2.b. Are adjournments limited to unforeseen and exceptional circumstances? No 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? n.a. 3. Can two of the following four reports be generated about the competent court: (i) No 0.0 time to disposition report; (ii) clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the Yes 1.0 competent court? 5. Are there any electronic case management tools in place within the competent court No 0.0 for use by judges? 6. Are there any electronic case management tools in place within the competent court No 0.0 for use by lawyers? Court automation (0-4) 0.0 1. Can the initial complaint be led electronically through a dedicated platform within No 0.0 the competent court? 2. Is it possible to carry out service of process electronically for claims led before the No 0.0 competent court? Page 56   1. Can the initial complaint be led electronically through a dedicated platform within No 0.0 Businesscourt? the competent Doing 2018 Honduras 2. Is it possible to carry out service of process electronically for claims led before the No 0.0 competent court? 3. Can court fees be paid electronically within the competent court? No 0.0 4. Publication of judgments 0.0 4.a Are judgments rendered in commercial cases at all levels made available to the No general public through publication in o cial gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme No court level made available to the general public through publication in o cial gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 2.5 1. Arbitration 1.5 1.a. Is domestic commercial arbitration governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public No order or public policy—that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes 2. Mediation/Conciliation 1.0 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all their aspects? 2.c. Are there nancial incentives for parties to attempt mediation or conciliation (i.e., No if mediation or conciliation is successful, a refund of court ling fees, income tax credits or the like)? Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are Measured in calendar years used: Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 Cost required to recover debt (% of debtor’s estate) suppliers. The hotel experiences nancial di culties. Page 57   Measured as percentage of estate value - The value of the hotel is 100% of the income per capita or the equivalent if mediation or conciliation is successful, a refund of court ling fees, income tax credits or the like)? Doing Business 2018 Honduras Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection for the project was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are Measured in calendar years used: Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 Cost required to recover debt (% of debtor’s estate) suppliers. The hotel experiences nancial di culties. Measured as percentage of estate value - The value of the hotel is 100% of the income per capita or the equivalent Court fees in local currency of USD 200,000, whichever is greater. - The hotel has a loan from a domestic bank, secured by a mortgage over Fees of insolvency administrators the hotel’s real estate. The hotel cannot pay back the loan, but makes Lawyers’ fees enough money to operate otherwise. Assessors’ and auctioneers’ fees In addition, Doing Business evaluates the adequacy and integrity of the Other related fees existing legal framework applicable to liquidation and reorganization Outcome proceedings through the strength of insolvency framework index. The index tests whether economies adopted internationally accepted good Whether business continues operating as a going practices in four areas: commencement of proceedings, management of concern or business assets are sold piecemeal debtor’s assets, reorganization proceedings and creditor participation. Recovery rate for creditors Measures the cents on the dollar recovered by secured creditors Outcome for the business (survival or not) determines the maximum value that can be recovered Official costs of the insolvency proceedings are deducted Depreciation of furniture is taken into account Present value of debt recovered Strength of insolvency framework index (0- 16) Sum of the scores of four component indices: Commencement of proceedings index (0-3) Management of debtor’s assets index (0-6) Reorganization proceedings index (0-3) Creditor participation index (0-4) Latin America & OECD high Indicator Honduras Caribbean income Overall Best Performer Recovery rate (cents on the dollar) 18.9 30.8 71.2 93.1 (Norway) Time (years) 3.8 2.9 1.7 0.4 (Ireland) Page 58   Cost (% of estate) 14.5 16.8 9.1 1.00 (Norway) Creditor participation index (0-4) Doing Business 2018 Honduras Latin America & OECD high Indicator Honduras Caribbean income Overall Best Performer Recovery rate (cents on the dollar) 18.9 30.8 71.2 93.1 (Norway) Time (years) 3.8 2.9 1.7 0.4 (Ireland) Cost (% of estate) 14.5 16.8 9.1 1.00 (Norway) Outcome (0 as piecemeal sale and 1 as going 0 .. .. .. concern) Strength of insolvency framework index (0-16) 7.0 7.2 12.1 15.00 (6 Economies) Figure – Resolving Insolvency in Honduras and comparator economies – Ranking and DTF DB 2018 Distance to Frontier (DTF) 0 100 70.02: Colombia (Rank: 33) 45.69: El Salvador (Rank: 84) 38.95: Regional Average (Latin America & Caribbean) 34.42: Costa Rica (Rank: 131) 32.07: Honduras (Rank: 142) 27.57: Guatemala (Rank: 153) Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their distance to frontier scores for resolving insolvency. These scores are the simple average of the distance to frontier scores for the recovery rate and the strength of insolvency framework index. Figure – Resolving Insolvency in Honduras – Time and Cost Time Cost 4 3.8 16.8 18 3.5 3.5 14.5 14.5 14.5 16 3.0 3.0 2.9 3 14 12.0 Cost (% of estate) Time (years) 12 2.5 8.5 9.1 10 2 1.7 1.7 8 1.5 6 1 4 0.5 2 0 0 Colombia Costa Rica El Salvador Guatemala Honduras Latin America & OECD high income Caribbean Figure – Resolving Insolvency in Honduras and comparator economies – Measure of Quality Honduras 4 2 1 0 Page 59   Colombia 5.5 3 1 1.5 Colombia Costa Rica El Salvador Guatemala Honduras Latin America & OECD high income Caribbean Doing Business 2018 Honduras Figure – Resolving Insolvency in Honduras and comparator economies – Measure of Quality Honduras 4 2 1 0 Colombia 5.5 3 1 1.5 Costa Rica 2 3 1 0 El Salvador 4 2 3 0 Guatemala 0 2 2 0 OECD high income 5.4 2.8 2.3 1.9 Latin America & Caribbean 3.7 2.4 1.9 0.8 0 2 4 6 8 10 12 14 Sub-Indicator Score Management of debtor's assets index (0­6) Commencement of proceedings index (0­3) Creditor participation index (0­4) Reorganization proceedings index (0­3) Figure – Resolving Insolvency in Honduras and comparator economies – Recovery Rate Recovery Rate (cents on the dollar) 70 66.2 60 50 40 32.6 30.8 29.1 28.0 30 18.9 20 10 0 Honduras Colombia Costa Rica El Salvador Guatemala Latin America & Caribbean Details – Resolving Insolvency in Honduras Indicator Answer Explanation Proceeding foreclosure BizBank will commence a foreclosure proceeding requesting the sale of the estate used as a collateral in satisfaction of the debt. Mirage won’t be able to request any type of suspension of the enforcement actions to avoid foreclosure because the acquiescence of all creditors is required. Debt rescheduling as part of a reorganization plan is not possible because there is no judicial reorganization procedure in Honduras. Outcome piecemeal sale It is not possible in Honduras for an insolvent company to start reorganization procedures so that the business may continue operating. If the secured creditor requires the sale of the assets used as collateral in satisfaction of the secure lending by means of a foreclosure, there is no legal instrument that will allow the business to continue operating. Therefore, its assets will be sold piecemeal. Time (in years) 3.8 The foreclosure proceeding will take approximately 3.75 years in Honduras from the Page 60   Honduras Colombia Costa Rica El Salvador Guatemala Latin America & Caribbean Doing Business 2018 Honduras Details – Resolving Insolvency in Honduras Indicator Answer Explanation Proceeding foreclosure BizBank will commence a foreclosure proceeding requesting the sale of the estate used as a collateral in satisfaction of the debt. Mirage won’t be able to request any type of suspension of the enforcement actions to avoid foreclosure because the acquiescence of all creditors is required. Debt rescheduling as part of a reorganization plan is not possible because there is no judicial reorganization procedure in Honduras. Outcome piecemeal sale It is not possible in Honduras for an insolvent company to start reorganization procedures so that the business may continue operating. If the secured creditor requires the sale of the assets used as collateral in satisfaction of the secure lending by means of a foreclosure, there is no legal instrument that will allow the business to continue operating. Therefore, its assets will be sold piecemeal. Time (in years) 3.8 The foreclosure proceeding will take approximately 3.75 years in Honduras from the moment of Mirage’s default until the debt is repaid to the secured creditor. It will take 1 year until the approval to initiate foreclosure is handed down by the Court including all required notifications and the debtor’s counter-claim. Henceforward, it will take 2 years for the auction to take place (including the necessary time to appoint an auctioneer, the scheduling of the auction and the sale of the real estate). It will take additional 9 months for the judge to approve the sale and have it registered. Cost (% of 14.5 The cost for a foreclosure proceeding as described above would amount to approximately estate) 14.5% of the value of Mirage’s estate. The main component of this expenditure would be the attorney’s fees, which would amount 10% of the value of Mirage’s estate. The rest of the cost would be judicial and notification expenses and expenses related to the auction (2%). The Auctioneer’s fees will amount 3% of the value of the debtor’s estate. Recovery rate (cents on the 18.9 dollar) Details – Resolving Insolvency in Honduras – Measure of Quality Page 61   dollar) Doing Business 2018 Honduras Details – Resolving Insolvency in Honduras – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 7.0 Commencement of proceedings index (0-3) 2.0 What procedures are available to a DEBTOR when commencing insolvency (b) Debtor may 0.5 proceedings? le for liquidation only Does the insolvency framework allow a CREDITOR to le for insolvency of the debtor? (b) Yes, but a 0.5 creditor may le for liquidation only What basis for commencement of the insolvency proceedings is allowed under the (a) Debtor is 1.0 insolvency framework? generally unable to pay its debts as they mature Management of debtor's assets index (0-6) 4.0 Does the insolvency framework allow the continuation of contracts supplying essential Yes 1.0 goods and services to the debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome Yes 1.0 contracts? Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit No 0.0 after commencement of insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (c) No priority is 0.0 assigned to post- commencement creditors Reorganization proceedings index (0-3) 0.0 Which creditors vote on the proposed reorganization plan? N/A 0.0 Does the insolvency framework require that dissenting creditors in reorganization No 0.0 receive at least as much as what they would obtain in a liquidation? Are the creditors devided into classes for the purposes of voting on the reorganization No 0.0 plan, does each class vote separately and are creditors in the same class treated equally? Creditor participation index (0-4) 1.0 Does the insolvency framework require approval by the creditors for selection or No 0.0 appointment of the insolvency representative? Does the insolvency framework require approval by the creditors for sale of substantial No 0.0 assets of the debtor? Page 62   Does the insolvency framework require approval by the creditors for selection or No 0.0 appointment Doing Business of the 2018insolvency representative? Honduras Does the insolvency framework require approval by the creditors for sale of substantial No 0.0 assets of the debtor? Does the insolvency framework provide that a creditor has the right to request No 0.0 information from the insolvency representative? Does the insolvency framework provide that a creditor has the right to object to Yes 1.0 decisions accepting or rejecting creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice”. Labor Market Regulation Doing Business presents the data for the labor market regulation indicators in an annex. The report does not present rankings of economies on these indicators or include the topic in the aggregate distance to frontier score or ranking on the ease of doing business. Detailed data collected on labor market regulation are available on the Doing Business website (http://www.doingbusiness.org/data/exploretopics/labor-market-regulation). The most recent round of data collection was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions (i) whether xed-term contracts are prohibited for about the worker and the business are used. permanent tasks; (ii) maximum cumulative duration of xed-term contracts; (iii) length of the The worker: probationary period; (iv) minimum wage. - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. Working hours - Is a full-time employee. (i) maximum number of working days allowed per - Is not a member of the labor union, unless membership is mandatory. week; (ii) premiums for work: at night, on a weekly rest day and overtime; (iii) whether there are The business: restrictions on work at night, work on a weekly rest - Is a limited liability company (or the equivalent in the economy). day and for overtime work; (iv) whether nonpregnant - Operates a supermarket or grocery store in the economy’s largest and nonnursing women can work same night hours business city. For 11 economies the data are also collected for the second as men; (v) length of paid annual leave. largest business city. - Has 60 employees. Redundancy rules - Is subject to collective bargaining agreements if such agreements cover (i) whether redundancy can be basis for terminating more than 50% of the food retail sector and they apply even to rms that workers; (ii) whether employer needs to notify are not party to them. and/or get approval from third party to terminate 1 - Abides by every law and regulation but does not grant workers more redundant worker and a group of 9 redundant bene ts than those mandated by law, regulation or (if applicable) collective workers; (iii) whether law requires employer to bargaining agreements. reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments due when terminating a redundant worker. Job quality (i) whether law mandates equal remuneration for work of equal value and nondiscrimination based on gender in hiring; (ii) whether law mandates paid or unpaid maternity leave; (iii) length of paid maternity Page 63   leave; (iv) whether employees on maternity leave the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice”. Doing Business 2018 Honduras Labor Market Regulation Doing Business presents the data for the labor market regulation indicators in an annex. The report does not present rankings of economies on these indicators or include the topic in the aggregate distance to frontier score or ranking on the ease of doing business. Detailed data collected on labor market regulation are available on the Doing Business website (http://www.doingbusiness.org/data/exploretopics/labor-market-regulation). The most recent round of data collection was completed in June 2017. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions (i) whether xed-term contracts are prohibited for about the worker and the business are used. permanent tasks; (ii) maximum cumulative duration of xed-term contracts; (iii) length of the The worker: probationary period; (iv) minimum wage. - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. Working hours - Is a full-time employee. (i) maximum number of working days allowed per - Is not a member of the labor union, unless membership is mandatory. week; (ii) premiums for work: at night, on a weekly rest day and overtime; (iii) whether there are The business: restrictions on work at night, work on a weekly rest - Is a limited liability company (or the equivalent in the economy). day and for overtime work; (iv) whether nonpregnant - Operates a supermarket or grocery store in the economy’s largest and nonnursing women can work same night hours business city. For 11 economies the data are also collected for the second as men; (v) length of paid annual leave. largest business city. - Has 60 employees. Redundancy rules - Is subject to collective bargaining agreements if such agreements cover (i) whether redundancy can be basis for terminating more than 50% of the food retail sector and they apply even to rms that workers; (ii) whether employer needs to notify are not party to them. and/or get approval from third party to terminate 1 - Abides by every law and regulation but does not grant workers more redundant worker and a group of 9 redundant bene ts than those mandated by law, regulation or (if applicable) collective workers; (iii) whether law requires employer to bargaining agreements. reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments due when terminating a redundant worker. Job quality (i) whether law mandates equal remuneration for work of equal value and nondiscrimination based on gender in hiring; (ii) whether law mandates paid or unpaid maternity leave; (iii) length of paid maternity leave; (iv) whether employees on maternity leave receive 100% of wages; (v) availability of ve fully paid days of sick leave a year; (vi) eligibility requirements for unemployment protection. Details – Labor Market Regulation in Honduras Answer Hiring Page 64   Fixed-term contracts prohibited for permanent tasks? Yes days of sick leave a year; (vi) eligibility requirements for unemployment protection. Doing Business 2018 Honduras Details – Labor Market Regulation in Honduras Answer Hiring Fixed-term contracts prohibited for permanent tasks? Yes Maximum length of a single xed-term contract (months) 12.0 Maximum length of xed-term contracts, including renewals (months) 24.0 Minimum wage applicable to the worker assumed in the case study (US$/month) 460.4 Ratio of minimum wage to value added per worker 1.6 Maximum length of probationary period (months) 2.0 Working hours Standard workday 8.0 Maximum number of working days per week 6.0 Premium for night work (% of hourly pay) 25.0 Premium for work on weekly rest day (% of hourly pay) 100.0 Premium for overtime work (% of hourly pay) 37.5 Restrictions on night work? Yes Whether nonpregnant and nonnursing women can work the same night hours as men Yes Restrictions on weekly holiday? No Restrictions on overtime work? No Paid annual leave for a worker with 1 year of tenure (working days) 10.0 Paid annual leave for a worker with 5 years of tenure (working days) 20.0 Paid annual leave for a worker with 10 years of tenure (working days) 20.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 16.7 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party noti cation if one worker is dismissed? Yes Third-party approval if one worker is dismissed? Yes Third-party noti cation if nine workers are dismissed? Yes Third-party approval if nine workers are dismissed? Yes Retraining or reassignment obligation before redundancy? No Page 65   Third-party Doing approval Business 2018 if nine workers are dismissed? Honduras Yes Retraining or reassignment obligation before redundancy? No Priority rules for redundancies? Yes Priority rules for reemployment? No Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure 4.3 Notice period for redundancy dismissal for a worker with 5 years of tenure 8.7 Notice period for redundancy dismissal for a worker with 10 years of tenure 8.7 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 7.2 Severance pay for redundancy dismissal for a worker with 1 year of tenure 4.3 Severance pay for redundancy dismissal for a worker with 5 years of tenure 21.7 Severance pay for redundancy dismissal for a worker with 10 years of tenure 43.3 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 23.1 Job quality Equal remuneration for work of equal value? No Gender nondiscrimination in hiring? Yes Paid or unpaid maternity leave mandated by law? Yes Minimum length of maternity leave (calendar days)? 84.0 Receive 100% of wages on maternity leave? Yes Five fully paid days of sick leave a year? Yes Unemployment protection after one year of employment? No Minimum contribution period for unemployment protection (months)? n.a. Business Reforms in Honduras In the year ending June 1, 2017, 119 economies implemented 264 total reforms across the di erent areas measured by Doing Business. Doing Business has recorded more than 2,900 regulatory reforms making it easier to do business since 2004. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are the reforms for Honduras implemented since Doing Business 2008. = Doing Business reform making it easier to do business. = Change making it more di cult to do business. DB2018 Registering Property: Honduras made registration of property more di cult by reducing the number of employees at the land registry. DB2017 Trading across Borders: Honduras made trading across borders more di cult by increasing the number of intrusive inspections for importing, which increased the border compliance time. Page 66   Minimum contribution period for unemployment protection (months)? n.a. Doing Business 2018 Honduras Business Reforms in Honduras In the year ending June 1, 2017, 119 economies implemented 264 total reforms across the di erent areas measured by Doing Business. Doing Business has recorded more than 2,900 regulatory reforms making it easier to do business since 2004. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are the reforms for Honduras implemented since Doing Business 2008. = Doing Business reform making it easier to do business. = Change making it more di cult to do business. DB2018 Registering Property: Honduras made registration of property more di cult by reducing the number of employees at the land registry. DB2017 Trading across Borders: Honduras made trading across borders more di cult by increasing the number of intrusive inspections for importing, which increased the border compliance time. DB2016 Protecting Minority Investors: Honduras strengthened minority investor protections by introducing provisions requiring greater disclosure of related-party transactions, prohibiting interested parties from voting on a related-party transaction, allowing shareholders representing at least 5% of a company’s share capital to bring a direct action for damages against its directors and giving any shareholder the right to inspect company documents. Paying Taxes: Honduras made paying taxes more costly for companies by introducing an alternative minimum income tax. DB2015 Starting a Business: Honduras made starting a business easier by eliminating the paid-in minimum capital requirement. Dealing with Construction Permits: Honduras made dealing with construction permits more costly by increasing the building permit fees. DB2012 Getting Credit: Honduras strengthened its secured transactions system through a new decree establishing a centralized and computerized collateral registry and providing for out-of-court enforcement of collateral upon default. Paying Taxes: Honduras made paying taxes costlier for rms by raising the solidarity tax rate. Trading across Borders: Honduras made trading across borders faster by implementing a web-based electronic data interchange system and X-ray machines at the port of Puerto Cortes. Enforcing Contracts: Honduras adopted a new civil procedure code that modi ed litigation procedures for enforcing a contract. DB2010 Starting a Business: Honduras simpli ed business start-up by improving the e ciency of business registration at the one-stop shop, improving the tax registration process and eliminating the need for a lawyer’s services to obtain a municipal license. Dealing with Construction Permits: Honduras reduced the time required for dealing with construction permits by streamlining administrative processes in the Construction Control Department. Getting Credit: Honduras improved its credit information system through a resolution that enhances the operations of the public credit bureau and introduces several categories for classifying debtors on the basis of their credit history. Labor Market Regulation: Honduras increased the severance payments applicable in redundancy dismissals. DB2009 Paying Taxes: Honduras made paying taxes easier for companies by encouraging electronic ling and payment. Trading across Borders: Honduras made importing easier by eliminating the requirement for consular legalization of trade documents. Page 67   DB2009 Paying Doing 2018 made Taxes: Honduras Business paying taxes easier for companies by encouraging electronic ling and payment. Honduras Trading across Borders: Honduras made importing easier by eliminating the requirement for consular legalization of trade documents. DB2008 Starting a Business: Honduras reduced the time required to start a business by simplifying municipal licensing procedures. Dealing with Construction Permits: Honduras made dealing with construction permits easier through administrative changes reducing the time required to obtain an environmental license from the Ministry of Natural Resources and to obtain approval for a telephone line. Registering Property: Honduras made registering property easier by setting time limits for the completion of certain procedures. Getting Credit: Honduras improved access to credit information by guaranteeing borrowers’ right to inspect their own data. In addition, the country strengthened its secured transactions system by allowing parties to a security agreement to agree to out-of- court enforcement of the security interest through the use of a notary. Page 68   addition, the country strengthened its secured transactions system by allowing parties to a security agreement to agree to out-of- court Doing Businessof enforcement the security 2018 interest through the use of a notary. Honduras Page 69