HONDURAS Law and Practice Contributed by: Alberto Zúniga, Carlos Zúniga and Garhem Padilla, Baker Tilly Honduras
8. Audit Cycles 8.1 Regular Routine Audit Cycle
Tax exposure may arise only where the transaction effectively involves the transfer of Honduran-source assets or economic interests located in Honduras.
Honduras does not operate a fixed or periodic audit cycle applicable to all taxpayers. The Tax Adminis - tration retains discretion to initiate audits within the applicable statute of limitations period. Audits may be triggered by risk indicators, inconsistencies in filings, transfer pricing disclosures or sector-specific review programmes. In recent years, enforcement has become more data-driven, supported by digital filing systems and expanded information reporting obligations, includ - ing transfer pricing documentation and country-by- country reporting requirements. While routine cyclical audits are not standard practice, compliance oversight has become increasingly struc - tured and technologically supported. 9. BEPS 9.1 Adoption of BEPS Recommendations Honduras joined the OECD Inclusive Framework on BEPS in 2019. Since then, certain transparency and transfer pricing measures have been strengthened at the domestic level. Transfer pricing legislation predates accession to the Inclusive Framework, but subsequent regula - tory developments – including country-by-country reporting requirements effective from fiscal year 2025 – reflect increased alignment with BEPS minimum standards. Broader structural reforms, such as CFC rules or global minimum taxation mechanisms, have not been implemented to date. 9.2 Government Policy and Objectives Approach The Honduran tax administration has shown interest in aligning aspects of domestic regulation with inter - national transparency standards. However, imple - mentation has been gradual and primarily focused on reporting and documentation obligations rather than structural system redesign. Policy discussions regard - ing broader reform have occurred in recent years, but
7. Anti-Avoidance Provisions 7.1 Overarching Provisions
Honduran tax legislation does not contain a single codified general anti-avoidance rule (GAAR) compa - rable to those found in certain OECD jurisdictions. However, several statutory and administrative mech - anisms operate to prevent base erosion and artificial loss generation. A notable measure is the anti-evasion regime requir - ing certain taxpayers with recurring operational loss - es and significant gross income levels to pay a 1% advance income tax calculated on gross revenue. This mechanism applies to entities that report consecutive or alternating losses in non-prescribed fiscal periods and exceed statutory gross income thresholds. The advance payment operates as a minimum tax and may be credited against annual income tax liabilities. In addition, the Tax Administration may invoke the principle of economic reality to recharacterise trans - actions where the legal form does not reflect their substantive nature. This principle is particularly rel - evant in indirect share transfers, related-party financ - ing arrangements and intra-group service structures. Tax evasion is also classified as a criminal offence under the Criminal Code, and administrative penalties may apply in cases of inaccurate reporting or failure to comply with withholding and documentation obli - gations. Although Honduras does not maintain a fully devel - oped GAAR framework, the combination of mini - mum taxation mechanisms, transfer pricing rules and substance-based review provides the authorities with meaningful anti-avoidance tools.
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