Disclosure Requirements

Taxpayers with controlled transactions in a tax year are required to submit details in the tax return, such as the amount of transactions, type of transactions, etc.

Further, taxpayers are required to file the Annual Transfer Pricing Informative return as follows:

For standard tax years ending in December, transfer pricing returns are required to be filed between 1 January and 30 April;
For non-standard tax years (not ending in December), transfer pricing returns are required to be filed within 3 months from the end of the tax year.

Standard Documentation

The transfer pricing rules mandatorily require a taxpayer to maintain contemporaneous transfer pricing documentation. The transfer pricing documentation is required to be provided to the tax authorities upon their request.

The transfer pricing documentation should include the following information:

Summary of activities and functions of the taxpayer;
Risks assumed and assets used by the taxpayer in carrying out these activities and functions;
Description/details, quantification of transactions entered into;
Identification of related parties with whom the declared intercompany transactions were performed;
Explanation on the selection of the most appropriate TP method and the financial indicators;
Comparability analysis;
Explanation of any economic analysis and support project;
Conclusion on the compliance of controlled transactions terms within arm’s length principle; and
Any other relevant information which can have a material impact on the taxpayer’s compliance with the arm’s length principle.

Country-by-Country (CbC) Reporting

Country-by-Country (CbC) reporting requirements apply in Honduras from the reporting fiscal years beginning on or after 1 January 2025. Each ultimate parent entity of the MNE Group that is resident for tax purposes in Honduras or a constituent entity resident for tax purposes in Honduras, which is not the ultimate parent entity of an MNE Group, meeting certain criteria (see below), is required to file a CbC report if the total consolidated group revenue exceeds EUR 750 million or its HNL equivalent during the fiscal year immediately preceding the reporting fiscal year.

The primary reporting obligation falls on the ultimate parent entity of the group (UPE) if resident in Honduras. Under a secondary filing obligation, constituent (non-UPE) entities are required to file locally in Honduras if:

The UPE is not resident in Honduras and is not obligated to file a CbC report in its jurisdiction of residence;
The UPE’s jurisdiction of residence has a current international agreement with Honduras but does not have a qualifying competent authority agreement in effect with Honduras by the time the CbC report is due; or
An agreement is in place, but there has been a systemic failure for the spontaneous exchange of CbC reports with the UPE’s jurisdiction of residence, and the failure has been notified by the Honduras tax authority to the constituent entity resident in Honduras.

Where there are more than one Honduras constituent entities of the same MNE Group and one or more of the conditions set out above apply, the MNE Group may designate one of such constituent entities to file the CbC report and notify the Honduras tax authority that the filing is done on behalf of all the constituent entities in Honduras.

Further, a Honduras constituent entity may not be required to file a CbC Report locally in Honduras, if the MNE Group has made available a CbC report with respect to the relevant fiscal year through a surrogate parent entity (SPE) (i.e., a constituent entity appointed as a sole substitute for the ultimate parent company to file the CbC report). The SPE must file the CbC report with the tax authority of its jurisdiction of tax residence no later than 12 months after the last day of the reporting fiscal year of the MNE Group. The following conditions are required to be satisfied:

The jurisdiction of tax residence of the SPE requires the filing of CbC Reports conforming to the requirements mentioned in the Honduras tax regulations;
The jurisdiction of tax residence of the SPE has a Qualifying Competent Authority Agreement in effect to which Honduras is a party on or before 12 months after the last day of the reporting fiscal year of the MNE Group;
The jurisdiction of tax residence of the SPE has not notified the Honduras tax authority of a systemic failure;
The SPE has notified in its jurisdiction of tax residence that it is designated as the SPE on behalf of the MNE Group; and
A notification has been provided by the Honduras constituent entity to the Honduras tax authority providing details of the SPE.

Where the CbC report is required to be filed locally in Honduras, the contents of the CbC report include the following for each jurisdiction:

Table 1:

revenues (unrelated parties, related parties, and total);
profit (loss) before tax;
income tax paid (cash basis);
income tax accrued - current year;
stated capital;
accumulated earnings;
number of employees; and
tangible assets - other than cash and cash equivalents.

Table 2:

constituent entities resident in each tax jurisdiction (including Tax ID and address);
jurisdiction of organization or incorporation if different from jurisdiction of residence; and
main business activities of each constituent entity.

Table 3:

additional information or explanation deemed necessary to understand the CbC report.

Where required to be filed locally in Honduras, the CbC report is required to be filed no later than 12 months after the last day of the reporting fiscal year of the MNE Group for reporting fiscal years beginning on or after 1 January 2025.

Further, a Honduras resident constituent entity of an MNE group must file a notification by 31 December of the reporting fiscal year as to whether it is the UPE or the SPE of the MNE Group, or, if it is not the UPE or the SPE, the name, tax identification number and tax residency of the reporting entity of the MNE Group.

Language of Documentation

The documentation is required to be prepared in Spanish.

Penalties

Taxpayers that fail to meet the transfer pricing requirements and the CbC notification and reporting requirements are subject to the following penalties:

Failure to provide information or providing false or grossly incomplete or inaccurate information or documentation to the tax authority attracts a fine of USD 10,000;
Declaring inaccurate or lower tax than the tax which would have been under arm’s length principle attracts a fine of 15% of tax adjustment made by the tax authorities;
Failure to provide the correct information or declare the correct taxable income attracts a penalty of 30% or USD 20,000 (payable in its equivalent in HNL), whichever is greater; and
Failure to comply with any other transfer pricing laws and CbC requirements attracts a penalty of USD 5,000 (payable in its equivalent in HNL).

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