The president of Honduras, Juan Orlando Hernández, created a new Tax Administration effective March 16, 2015. By two recent Executive Decrees,¹ the President replaced Dirección Ejecutiva de Ingresos² (DEI) with the Sistema de Administración de Rentas (SAR).

The structural change resulted in the termination of all DEI employees (approximately 1,500 persons). The SAR is currently in the process of hiring new employees.

According to press reports, the SAR was created with the assistance and support of the Inter-American Development Bank and the Inter-American Center of Tax Administrations (CIAT) and is based on Ecuador's current tax administration system.

The Executive Branch's rationale for implementing this change is to provide a modern and efficient tax administration capable of allowing taxpayers to file and pay their taxes electronically. To achieve this goal, qualified staff will be hired and new software platforms will be implemented to allow a faster tax collection and an improved interaction for taxpayers.

The SAR will have the same powers as the DEI plus new ones,³ including: (i) a broad power to request any kind of information (e.g., financial) from private or public third parties; and (ii) the power to designate tax withholding and collection agents.

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ENDNOTES

¹ Executive Decrees No. PCM-083-2015 and PCM-084-2015.

² The DEI was created in 1994 by Law Decree 159/94.

³ Section 3 of the Executive Decree PCM-084-2015.