Publication: Income Taxation of the Top Earners in Honduras: Linking Personal and Corporate Taxes
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Date
2025-03-12
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2025-03-12
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Abstract
This note examines the effective income tax rates of top earners in Honduras, using a novel approach that links personal and corporate income tax data. This comprehensive income measure, achieved through collaboration with the Honduras Tax Authority (SAR), reveals a crucial link between the design of personal and corporate income taxes. The findings indicate that over 50% of total comprehensive income for the top 0.05% of earners comes from undistributed corporate profits, while distributed capital income accounts for less than 15%. The effective tax rate (ETR) for the top 0.01% of earners hovers around 25%, which is relatively flat compared to the significant drop observed in high-income countries. This is attributed to Honduras’s flat corporate income tax rate of 25% aligning with the highest marginal rate for personal income.
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“Scot, Thiago; Bachas, Pierre; Cesteros, Santiago; Flores, Tatiana; Oqueli, Gabriel; Espinal Hernandez, Edgardo Enrique; Ponce Nuñez, Wilman Alonso; Canales Licona, Sahira Rocio. 2025. Income Taxation of the Top Earners in Honduras: Linking Personal and Corporate Taxes. Prosperity Insight Series. © World Bank. http://hdl.handle.net/10986/42937 License: CC BY-NC 3.0 IGO.”
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