A considerable portion of the global economy already operates—and will continue to operate—in digital environments. Online services, technology platforms, intangible goods, subscriptions, and on-demand content have become part of everyday consumption. Consequently, the tax systems of dozens of countries have had to modernize to prevent revenue loss and to ensure a level playing field between traditional and digital businesses. However, in Honduras, the tax system—particularly the Sales Tax (ISV)—still functions under an analog framework, excluding an entire and rapidly growing segment of the economy. [2]
While neighboring countries are reforming their laws, adopting modern audit mechanisms, and aligning with OECD and CIAT recommendations, Honduras remains stuck with patchwork regulations, unenforced decrees, and electronic invoicing initiatives that have yet to take off. This disconnect not only results in lost public revenue; it also exacerbates informality, distorts market competition, and deepens institutional lag.
The Reality Beyond Honduras
Internationally, more than 70 countries—including several Latin American economies such as the Bahamas, Barbados, Chile, Colombia, Costa Rica, and Mexico—have adopted the OECD’s guidelines for the taxation of digital commerce, achieving positive outcomes in terms of tax revenue, improved compliance, and greater equity between digital and traditional operations. As part of these reforms, many of these countries have chosen to tax digital consumption based on a key principle: the tax must be paid where the consumer is located, regardless of whether the service provider has a physical presence in that jurisdiction.
This has led to requirements for companies such as Netflix, Spotify, Meta, or Amazon to register with local tax authorities, or alternatively, for credit card issuers or banks to withhold the tax at the point of payment. In either scenario, the underlying logic is straightforward: if consumption occurs within the country, the tax liability should arise there as well.
Moreover, in these countries, the implementation of electronic invoicing has played a central role—not as a pilot program, but as a core pillar of tax control, formalization, and administrative efficiency. Argentina, Peru, Brazil, Ecuador, and Mexico have years of experience with such systems (as do more recent adopters like El Salvador), and the results are evident: higher compliance, reduced evasion, and a broader and more robust tax base. [3]
Honduras: Regulatory Delays and Lack of Modernization
In stark contrast to this dynamic international landscape, Honduras remains significantly behind in adapting its tax system to the digital economy. As of today, the Honduran Sales Tax (ISV) legislation does not include specific rules addressing the provision of digital services or the sale of intangible goods. Within this context, no clear definitions or mechanisms have been incorporated to tax digital consumption. In practice, this means that the download of an app, subscription to a foreign online service, or the purchase of digital content by Honduran consumers may not be effectively taxed—especially when the service provider has no physical presence in the country. In fact, a 2021 study estimated that by failing to tax foreign digital services, Honduras (alongside seven other countries in the region) forfeited millions of dollars in ISV revenue in 2018 that were rightfully due to its treasury. [4] These are significant public resources lost, while digital commerce continues to thrive without proper taxation.
Another critical issue is the absence of a fully functional electronic invoicing system. While most Latin American countries already operate electronic invoicing schemes—many of them mandatory and widespread—Honduras only began taking initial steps in 2023, with international technical assistance, to implement electronic tax documents.[5] There is still no broad coverage or general obligation to issue electronic invoices in the country. This severely undermines fiscal control: without electronic invoicing, it becomes significantly harder for the tax administration to detect undeclared sales, monitor high volumes of online transactions, or even track transactions between local businesses. The lack of this technological pillar not only hampers ISV collection in the digital economy but weakens ISV enforcement more broadly and impedes efforts to integrate the informal sector. In countries with high informality levels like Honduras, electronic invoicing is often a powerful tool for formalizing economic activity (e.g., requiring it for government sales or for deducting business expenses helps pull informal suppliers into the formal economy). By lacking a fully operational system, Honduras misses a golden opportunity to bring greater transparency to commerce.
Conclusions
In conclusion, Honduras faces the urgent and unavoidable challenge of modernizing its tax system to meet the demands of the digital era. The Honduran economy cannot afford to maintain legal and operational loopholes that effectively exempt an increasingly significant share of economic activity. International experience demonstrates that it is entirely feasible to tax the digital economy effectively without stifling innovation—yielding valuable public revenue while ensuring a level playing field for all forms of commerce. Honduras has access to models, tools, and internationally endorsed recommendations ready for implementation. The next step is to translate them into concrete action. Enacting digital ISV rules, launching a robust electronic invoicing system, promoting formalization, and engaging digital platforms as fiscal allies are measures that would bring substantial benefits: increased revenue, expanded formalization, and a modernized tax system aligned with economic progress. At a time when digitalization is moving forward rapidly, inaction means surrendering fiscal ground and undermining future competitiveness. Honduras has the opportunity to lead the region in digital taxation—if it embraces these reforms and undertakes a comprehensive, forward-looking tax overhaul. Honduran taxpayers—both businesses and consumers—already live in the digital economy; it is time for the tax system to do the same.
[1] OECD/WBV/CIAT/IDB, «VAT Digital Toolkit for Latin America and the Caribbean (OECD 2021)», disponible en https://www.oecd.org/tax/ consumption/vat-digital-toolkit-for-latin-america-and-the-caribbean. Htm
[2] R. Ramos Obando, «A Decade of VAT Reforms in Honduras: A Legislative Fixation on Exemptions», International VAT Monitor 35, n.o 3, https://doi.org/10.59403/2f52j1s.
[3] Ver Fany Karol Mejia Dueñas, «El Proceso de Masificación de la Facturación Electrónica en el Salvador», en Retos y oportunidades para las administraciones tributarias tras la crisis de COVID-19, ed. CIAT y NORAD, Libros CIAT (CIAT/NORAD, 2023), 175-82.
[4] Juan Pablo Jiménez y Andrea Podestá, «Tributación indirecta sobre la economía digital y su potencial recaudatorio en América Latina: Emparejando la cancha en tiempos de crisis», Centro Interamericano de Administraciones Tributarias – CIAT, de abril de de 2021.
[5] CIAT, «CIAT-SECO Cooperation Program Provides Technical Assistance to the Honduran Revenue Administration Service (Servicio de Administración de Rentas) on Issues Related to the Implementation of Electronic Tax Documents», 17 de marzo de 2023, https://ciat.org/ciat-seco-cooperation-program-provides-technical-assistance-to-the-honduran-revenue-administration-service-servicio-de-administracion-de-rentas-on-issues-related-to-the-implementation-of-electronic/?lang=en
