Honduras

Honduras enacted its Transfer Pricing Law through Decree No. 232-2011, published on 10 December 2011, with the objective of regulating commercial and financial transactions between related parties in accordance with the arm’s-length principle. The implementing regulations were subsequently issued through Agreement No. 027-2015 on 18 September 2015, establishing the procedural framework and guidance for the application of the transfer pricing rules.

The transfer pricing regime applies to transactions carried out between individuals or entities domiciled or resident in Honduras and their related parties, including entities operating under special tax or customs regimes that benefit from tax incentives.

Taxpayers may request an Advance Pricing Agreement (APA) from the tax authorities to obtain prior confirmation that the pricing of specific related-party commercial or financial transactions complies with the arm’s-length principle for a defined period.

For transfer pricing purposes, two or more individuals or legal entities, whether domiciled in Honduras or abroad, are considered related parties where any of the following circumstances apply:

• An individual, entity, or legal person participates, directly or indirectly, in the management, control, or capital of another entity.
• The same individual, entity, or legal person participates, directly or indirectly, in the management, control, or capital of two or more entities.
• The parties form part of the same decision-making unit.
• The parties engage in direct or indirect commercial or financial transactions. Indirect transactions include arrangements designed to reduce the income tax base, particularly where they involve Honduran resident or domiciled entities and parties located in jurisdictions classified as tax havens.
• The entities share common directors, managers, or administrators.

Where the relationship is determined by reference to ownership interests or voting rights, a direct or indirect participation exceeding 50% is required.

For transfer pricing purposes, a comparability analysis involves evaluating controlled and uncontrolled transactions, assets (whether tangible or intangible), services, or entities to identify similarities and differences and to determine whether any material differences affecting the conditions or pricing of a transaction can be reliably adjusted.

The principal comparability factors include:

• The characteristics of the goods, services, or assets involved.
• The functions performed, assets employed, and risks assumed by each party to the transaction.
• The contractual terms governing the transaction.
• The economic circumstances and market conditions in which the parties operate.
• The business strategies pursued by the parties.