Transfer Pricing
Country Summary
Honduras

This document summarizes the transfer pricing requirements and regulations in Argentina. Honduras is not an OECD member, but its transfer pricing rules follow the OECD Guidelines when they don’t contradict local tax regulations. Key regulations include Decree No. 232-2011, effective from 2014, and Executive Decree No. 027-2015 from September 2015. Related parties are defined based on control or capital participation. Honduras allows Advance Pricing Agreements (APAs) and places the burden of proof on taxpayers during audits.

Overview:

Legal Framework and OECD Guidance

Honduras, while not an OECD member, leverages the OECD Guidelines as a reference for its transfer pricing rules. Key regulations include Decree No. 232-2011, which came into effect in 2014, and Executive Decree No. 027-2015 from September 2015. These regulations form the core of the country’s transfer pricing framework.

Definition of Related Party

Honduras defines related parties as entities linked by direct or indirect capital control. A related party can also own at least 50% of another entity and meet certain criteria, like having voting rights or control over the administrative structure. Transactions between local entities and foreign ones in tax havens are also considered related party transactions.

Transfer Pricing Documentation

Honduras requires transfer pricing documentation that demonstrates the arm’s length pricing of related party transactions. Companies need to prepare a Transfer Pricing (TP) informative return and a TP Study that covers all relevant information and analysis. While specific disclosure obligations are not detailed, the tax authorities may request additional information.

Transfer Pricing Methods

Honduras aligns its transfer pricing methods with the OECD Guidelines, allowing the Comparable Uncontrolled Price Method (CUP), Resale Price Method (RPM), Cost Plus Method (CPM), Profit Split Method (PSM), and Transactional Net Margin Method (TNMM). Importantly, taxpayers can use other methods if they can prove their suitability when none of the primary methods apply.

Economic Analysis and Benchmarking

Honduras lacks statutory comparables for transfer pricing, so the OECD Guidelines are applied. This means that companies must rely on external comparables and data to determine arm’s length pricing.

Legal Agreements and Compliance

Inter-company legal agreements play a role in formalizing financial relationships among group entities. However, Honduras follows the OECD’s 2017 Guidelines, prioritizing the ‘conduct of parties’ over the contractual agreements.

Record Keeping and Penalties

Records must be retained per the provisions of the Taxation Code. Violations of transfer pricing regulations can result in penalties ranging from US$5,000 to 30% of the tax difference. Non-compliance with information requests may lead to a US$10,000 penalty.

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