Honduras – Transfer Pricing (2025)

Legal framework and scope

Honduras’ domestic transfer pricing framework is founded on Decree No.232 -2011, Transfer Pricing Regulation Law, and its implementing regulation, Agreement No. 027 -2015 - Regulation of the Transfer Pricing Regulation Law. These instruments set out the arm’s length principle (Article 1), key definitions (Article 3 and Article 4), documentation obligations and the requirement to submit transfer pricing studies and informative returns (Decree No.232 -2011, Article 17; Agreement No. 027-2015, Articles 29-33). Additional developments include Agreement No. SAR-653-2023 which establishes mandatory Country-by-Country Reporting. The Tax Administration is in the process of preparing further regulations to complement the Transfer Pricing Law.

Arm’s length principle and the role of the OECD Guidelines

Honduras explicitly refers to the arm’s length principle in its domestic law and recognizes the OECD Transfer Pricing Guidelines as a technical reference. Agreement No. 027-2015, Article 38 states that the OECD TPG will be followed as a technical reference for the provisions of the Regulation when they are consistent with the Honduras legal framework. Therefore, OECD guidance — including the Best Method Principle, comparability analysis and other technical concepts — is used as a technical reference in the application of domestic rules.

Definition of related parties

The Honduran rules provide a comprehensive definition of related or associated parties for transfer pricing purposes. Decree No.232 -2011, Article 3 paragraph 3 and Article 4, and the Regulation (Agreement No. 027-2015, Articles 11, 12 & 13) define “Related or Associated Parties” to include two or more natural or legal persons when there is direct or indirect participation in management, control or capital; when the same persons participate directly or indirectly in management, control or capital of both entities; when entities constitute a decision-making unit as described in Article 4; or when commercial or financial operations occur between residents and persons located in jurisdictions classified as tax havens. Article 4 sets the level of participation at more than fifty percent (50%) when defined by share capital or voting control.

The Regulation further expands related-party criteria (Agreement No. 027-2015, Article 12): participations exercised via family relationships under the Family Code, shared participation in management across entities, permanent establishments abroad, exclusive agency/distribution relationships with preferential contractual terms, financial or economic dependence through joint action agreements or trusts, and counterparties incorporated in jurisdictions identified as tax havens by OECD publications. In sum, Honduras applies broad related-party criteria including de facto control, family ties, contractual dependencies and the involvement of low-tax jurisdictions.

Methods and rule for application

Honduran law lists the commonly accepted transfer pricing methods: Comparable Uncontrolled Price (CUP), Resale Price, Cost Plus, Transactional Net Margin Method (TNMM), Profit Split and also allows a specific method applicable to exports of internationally traded goods. These are authorized under Decree No.232 -2011, Articles 8 and 10, and Agreement No. 027-2015, Article 23. The export-specific method permits exporters of goods with public quotations on transparent markets or exchanges to apply the comparable uncontrolled price method using the market quotation at the date of shipment, adjusted for normal costs of origin in Honduras. Taxpayers may also adopt a different method if they can demonstrate that the enumerated methods cannot reasonably and reliably be applied and that the alternative method aligns with international standards and yields results comparable to those that independent parties would obtain.

Honduras follows the “Most Appropriate Method” approach (Best Method Principle). Decree No.232 -2011, Articles 8 & 9, and Agreement No. 027-2015, Article 24 require taxpayers to select the method that best fits the business line, structure and specific circumstances of the case, referring to general market practices and customs as established in the OECD TPG.

Comparability and ranges

Honduras largely follows the comparability analysis guidance of Chapter III of the OECD TPG. Decree No.232 -2011, Article 7, and Agreement No. 027-2015, Articles 17-21 and 38 incorporate comparability assessment into the legal framework. There is no preference for domestic comparables over foreign ones: Agreement No. 027-2015, Article 20 explicitly allows domestic and foreign information from reliable public and private sources to be used when local data is not available, applying relevant adjustments to reflect market differences. The use of secret comparables for assessment purposes is not permitted (Agreement No. 027-2015, Article 20).

Honduras permits the use of an arm’s length range and statistical measures where there are two or more comparable transactions. Decree No.232 -2011, Article 9 and Agreement No. 027-2015, Articles 25 and 26 state that price, transaction amount or profit margins can result in a range when exact determination is not possible. Comparability adjustments are required: Decree No.232 -2011, Article 7 and Agreement No. 027-2015, Article 17 provide that transactions are comparable only where there are no significant differences that affect price or margin, or where such differences can be reasonably adjusted or eliminated.

Documentation and reporting

Honduras requires transfer pricing documentation and has implemented the Master File, Local File and Country-by-Country Report consistent with Annexes I-III of Chapter V of the OECD TPG. Agreement No. 027-2015, Articles 29-33 and Decree No.232 -2011, Article 17 require taxpayers to submit, upon request, a Transfer Pricing Study containing at minimum: the taxpayer’s activities and functions; risks assumed and assets used; details and quantification of related-party transactions; identification of related parties; the valuation method used and justification; identification of comparables and comparability factors; information sources; details and quantification of adjustments made; a description of comparable companies’ business; the median and arm’s length range; market price; and the detail of adjustments performed to comply with the arm’s length principle (Agreement No. 027-2015, Article 32, paragraphs a)-n)).

Article 31 of the Regulation sets out the content, deadline and mechanism for the Annual Informative Affidavit on Transfer Prices. For taxpayers with fiscal periods coinciding with the calendar year, the informative return period runs from 1 January to 30 April (or the next business day). Taxpayers with special fiscal periods must submit the affidavit no later than three months after the fiscal year-end. The mechanism for submission is via electronic applications and data structures established by the Tax Administration.

Regarding Country-by-Country Reporting, Agreement No. SAR-653-2023 requires that the Ultimate Parent Entity resident in Honduras file a CbC Report following the definitions and model in Annex III of Chapter V of the OECD Guidelines. The CbC Report must be submitted in XML format complying with the OECD standard, and the report must be filed within 12 months of the last day of the Multinational Group’s Reportable Fiscal Year. There is an exemption if the jurisdiction of the Ultimate Parent has set a submission threshold equivalent to or less than EUR 750 million in national currency according to the exchange rate in effect in January 2015.

The law contemplates translation requirements: Article 53 as amended by Decree 255-2022 provides that foreign-language documents may be translated at Honduran consulates accredited in the issuing country or by the Official Translator of the Republic.

Safe harbours / exemptions / materiality

Honduras does not provide sector-specific safe harbours or broad simplification measures for particular industries in the transfer pricing law. The Income Tax Law (Decree No. 25), Article 25 and Article 5 subsection 7) contain specific rules treating certain payments (e.g., when interest to related parties may be treated as dividends). Regulatory Agreement DEI-SG-004-2016 and Agreement No. 027-2015, Article 30 create an exemption from filing the transfer pricing form for small taxpayers whose accumulated commercial or financial operations with related parties within the same fiscal period total less than USD 1 000 000 (or equivalent in Lempiras). Also, Article 113 of the Tax Code contains certain exemptions for presentation of the Transfer Pricing Study for taxpayers without related parties in the national territory, with specified exceptions.

APAs and MAP; procedures and timing

The legal framework allows Advance Pricing Agreements (APAs). Decree No.232-2011, Articles 13 & 14 and Agreement No. 027-2015, Article 34 provide for APAs; however, the Tax Administration currently has no APA programme in place. Mutual Agreement Procedure (MAP) mechanisms are not specifically referred to in the tax law according to the profile. Therefore, while APAs are legally permitted, there is no operational programme described in the profile and MAPs are not formalized in domestic law as presented.

Penalties and other considerations

Decree No.232-2011, Articles 18 and 19 set out tax offenses and penalties related to transfer pricing. Failure to provide, or providing false or manifestly incomplete or inaccurate data, when required by the Tax Administration is an offense; Article 19 prescribes a fine of USD 10 000 (or its equivalent in Lempiras) for that infringement. Declaring a taxable base lower than that corresponding to arm’s length valuation, without documentation to prove it, is sanctioned with a fine of 15% on the amount of the adjustment made by the Administration; if this conduct is accompanied by the failure to provide required documentation the sanction will amount to 30% or USD 20 000 (whichever is greater). Other breaches are sanctioned with USD 5 000. Agreement No. 027-2015, Articles 35 and 36 further regulate sanctioning aspects.

Secondary adjustments are not provided for in domestic law: the profile states “Secondary adjustments do not exist in the domestic tax law.” Regarding unilateral corresponding adjustments in the absence of a MAP, Honduras does not generally allow them freely. Agreement No. 027-2015, Article 16 paragraph 2 provides that if another State has made a transfer pricing adjustment (primary adjustment), taxpayers may rectify the price, value or profitability of related-party transactions only when several conditions are met simultaneously: prior authorization from the Tax Administration regarding the nature and amount of the adjustment; existence of a Double Taxation Convention in force with that State that does not prohibit the corresponding adjustment; the adjustments made by the other State must have been paid and not be subject to administrative or judicial appeals; and the adjustments must be certified by the Tax Administration of the State that made them.

Year-end adjustments are allowed: according to the Manual for the Annual Informative Affidavit on Transfer Prices, self-adjustments of transfer prices at year-end are permitted; taxpayers make the adjustment, report it in the Annual Informative Tax Return on Transfer Pricing and the adjustment affects the amount of Income Tax payable.

Attribution of profits to Permanent Establishments

The profile indicates that Honduras has not established specific domestic guidance for attribution of profits to permanent establishments. The Tax Administration should determine procedures by General Character Agreement consistent with the Tax Code and Income Tax Law, but this has not been established to date. Therefore, there is no clear application of the Authorized OECD Approach (AOA) in domestic practice according to the information in the profile.

Other relevant information

The domestic framework contains some provisions relevant to financial transactions: Decree No.232 -2011, Articles 5, 6 and 11 make references in the Transfer Pricing Law; however, the Agreement No. 027-2015, Articles 15, 16 and 38 indicate no specific guidance has been issued for financial transactions. Separately, Income Tax Law (Decree No. 25), Article 5 numeral 7) and Article 12 subsection e) set limits on interest deductibility where payments are made to related parties, and in certain cases interest paid to related parties will be treated as dividends for withholding purposes.

The Tax Administration is working on new transfer pricing regulations and related topics. The profile highlights gaps where no domestic guidance is provided: there is no active APA programme, no formal MAP procedure in law, no specific HTVI guidance, no simplified approach for low value-adding intra-group services, and no sectoral safe harbours. These are areas where domestic practice is incomplete and where the OECD TPG remain the technical reference.

Conclusion

Honduras has a comprehensive statutory transfer pricing framework that integrates key definitions, accepted transfer pricing methods and documentation obligations, and explicitly uses the OECD Guidelines as a technical reference when compatible with domestic law. The country has implemented Master File, Local File and Country-by-Country Reporting obligations with defined submission formats and timelines. Nevertheless, practical and procedural gaps remain — including the absence of an operational APA programme, lack of HTVI and PE attribution rules, and limited administrative simplification measures — so taxpayers and advisors must carefully observe documentation, deadlines, translation requirements and the sanctions regime.

References

For general information and access to the OECD transfer pricing country profiles, see https://www.oecd.org/en/topics/sub-issues/transfer-pricing/transfer-pricing-country-profiles.html