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Honduras SEZ Recognizes Bitcoin as Unit of Account to Further Financial Freedom

Sujha Sundararajan
Last updated: | 1 min read
Source: Pixabay

Honduras’ Roatan Island special economic zone (SEZ) – Próspera ZEDE – has officially recognized Bitcoin (BTC) as a unit of account for various financial transactions.

“This makes Bitcoin acceptable for commercial, tax, and financial transactions.”

According to Jorge Colindres, technical secretary and tax commissioner of the (SEZ), the decision provides more financial and monetary freedom. “People should be free to carry out transactions, do their accounting and report taxes in the currency of their free choice,” he added.

Source: X (Twitter)

Colindres announced the move on January 5, outlining the conditions for legal entities interested in adopting Bitcoin as a unit of account.

“Próspera ZEDE recognizes the right of (e)Resident legal entities organized or registered under the authority of the Prospero Entity Registry Statute to use Bitcoin (“BTC”) as their respective unit of account, in the sense of the monetary unit or measure of value in terms of which their accounts are kept and values stated,” the statement read.

This means that interested entities must file a notice with the Tax Commissioner within thirty days of the tax period. The notice should reference an approved major cryptocurrency exchange like Kraken or Coinbase. Further, Colindres reposted a Tweet, reminding entities that the deadline to apply for BTC as a unit of account for 2024 tax year is 30 January.

Temporary Limitations

Colindres noted that technical limitations of the e-government system, added to external regulatory issues, have temporarily limited the “Final BTC Tax Payment Procedure.”

Entities that chooses Bitcoin will have to determine tax obligations in reference to BTC for internal accounting purposes, until the procedure is implemented. However, they would report them in US dollars or the local currency, Lempira, to Próspera ZEDE.

He added that entities can report their tax obligations in Bitcoin after resolving the issues.

Próspera ZEDE, a special economic zone on a tourist-centric island on Honduras’ Caribbean coast, adopted Bitcoin as a legal tender in 2022. The SEZ noted at the time it will also let municipalities, local governments and international firms issue Bitcoin bonds from the area’s jurisdiction.

However, following the announcement, the Central Bank of Honduras said that it cannot vouch for cryptocurrency transactions.

Honduras followed its neighboring country El Salvador, which adopted BTC in September 2021, becoming the first country to do so.