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News > Honduras

Hondurans Denounce 'Model Cities' as Tax Havens

  • The sign reads,

    The sign reads, "Roatan is not for sale. NO to ZEDEs," Honduras. | Photo: Twitter/ @HondurasRosales

Published 20 May 2021

The JOH administration is promoting special economic zones that would attract foreign investors by offering them significant tax exemptions.

Honduras' Alternative Movement of Community and Environmental Reivindication (ARCAH) announced a mobilization to protest new initiatives to strengthen the Economic Development and Employment Zones (ZEDE).


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The ZEDE project was presented by Honduras' ex-President Porfirio Lobo (2010-2014) in a bid to promote local development through foreign investment. In 2013, Constitutional reforms paved the way for the implementation of this initiative also known as "model cities."

Recently, President Juan Orlando Hernandez (JOH) presented a reform to grant ZEDEs greater powers in terms of tax exemptions and benefits to investors.

Lawyers organizations and human rights activists, however, denounce that these zones create tax havens that would benefit corrupt officials and drug traffickers. They also highlight that the principle of national law application is jeopardized since these cities would have their justice and police systems. 

"It is urgent to stop the project because it includes that no person can oppose ceding their territory to the ZEDE. All real estate properties within these cities can be incorporated into the expropriation regime," ARCAH coordinator Cristofer Castillo warned.  

The first ZEDE project is being built in the Choloma municipality. Colon, Atlantida, Gracias a Dios, Valle, Choluteca, and Islas de la Bahia are some departments where model cities will be developed. 

"Hondurans will enter a different jurisdiction in these cities, with foreign laws, their own police, their own tax collection system. We are practically creating a small country within our country," attorney Raul Pineda said.

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