Honduras has a small extractive sector, contributing less than 1% of government revenue and 0.62% of total GDP in 2019. While there has been interest in expanding mining investments and developing the hydrocarbon sector, there has been no commercial production of oil or gas to date. Honduras mainly produces gold, zinc, calcium carbonate, silver and lead.
Honduras’s 2019-2020 EITI Report adopts a flexible approach and was prepared by the multi-stakeholder group (MSG) without additional funding. The report includes timely information about ongoing reforms, fiscal incentives and the impact of the COVID pandemic on the mining sector.
Honduras’s 2017-2018 EITI Report provides employment information disaggregated by gender for the first time.
Extractive sector data
Commodity production
Revenue collection
Revenue disbursement
Revenue distribution
Extractive sector management
Tax and legal framework
The mining sector in Honduras is governed by the General Mining Law of 2013 and administered by the Honduran Institute of Geology and Mining (INHGEOMIN). The hydrocarbon sector is governed by the Hydrocarbon Law and administered by the Secretary of Natural Resources and Environment (SERNA/MIAMBIENTE).
Extractive companies are subjected to taxes as per the Tax Code, the General Mining Law, the Hydrocarbon Law and the prevailing contracts and municipal taxes levied directly at the subnational level. An overview of the applicable taxation framework is available at the Secretary of Finances (SEFIN).
License and contracts
Mining licenses are awarded and administered by INHGEOMIN. The procedures for requesting a mining license are explained in the 2019-2020 EITI Report as per the applicable regulation. Mining licences are publicly available via the INHGEOMIN portal.
The hydrocarbon sector is managed under a contract regime. The 2014 EITI Report elaborates further on the awarding procedures. Honduras has no oil or gas production to date.
Beneficial ownership
Honduras requires companies to disclose beneficial ownership information through the Special Law for Money Laundering and the Regulation on Requirements, Control Measures and Responsibilities of Institutions. In 2015, EITI Honduras produced a report on beneficial ownership to assess the country’ legal framework and key considerations for disclosure. Honduras has adhered to the Caribbean Financial Action Task Force to disclose information about beneficial ownership.
For the process of preparing the EITI Report, EITI Honduras requests beneficial ownership information from companies adhered to the EITI Standard. However, this information is not publicly available.
Honduras’s Constitution (Article 636) establishes that ordinary tax revenues constitute a single fund in the General Treasury. Therefore, all taxes from the extractive sector are transferred into that fund, which is subsequently used for the execution of the state budget.
Municipalities receive shares of mining revenue in accordance with the Municipalities Act. Direct revenues are also received in relation to mining activity in accordance with the Mining Act. The Municipalities Act (Article 91) establishes that the state must distribute a specific percentage of revenues to the municipalities from the central fund of the General Treasury. However, it is not possible to determine whether this subnational transfer comes from the extractive industry payments.
EITI implementation
Governance
EITI Honduras is administered by the Honduras Multi-Stakeholder Group (MSG), also known as the Consejo Nacional. The MSG is hosted by the Honduran Institute of Geology and Mines (INGHEOMIN). It is comprised of representatives from government, industry and civil society.
Honduras was found to have made meaningful progress with considerable improvements in implementing the 2016 EITI Standard in October 2020, following its second Validation. However, due to inadequate civil society engagement, the country is temporarily suspended. Honduras has fully addressed seven of the 12 corrective actions identified in its previous Validation. The next Validation is expected to commence in July 2023.
