Implementation of the Country-by-Country Report in Honduras

April 25, 2024

Honduras is placed at the forefront of international tax transparency through the implementation of Agreement SAR-653-2023, issued by the SAR (Servicio de Administración de Rentas – Revenue Administration Service). This agreement, designed to strengthen the monitoring of the global transactions of multinational groups, sets a milestone against tax avoidance. Intended to come into force for fiscal years as of January 1, 2025, this regulatory framework aims to clarify the business and tax activities of these conglomerates within the national territory and beyond. 

Introduction to the Tax Transparency Regulations  

The SAR has taken a decisive stride with the introduction of Agreement SAR-653-2023, aligning Honduras with international tax transparency standards. It arose to improve the visibility of business transactions and tax contributions of multinational groups, providing the tax authorities with more effective tools to ensure tax compliance. 

Details of the Agreement and Obligations for Taxpayers

Obligated Taxpayers

Taxpayers required to file the Country-by-Country Report are Multinational Groups (MNGs) that: 

  • Include two or more companies with tax residence in different jurisdictions or perform business activities through a permanent establishment in another jurisdiction. 
  • Are not considered “Excluded Multinational Groups,” i.e., those whose total consolidated revenues are less than € 750 million or the equivalent of 19 billion lempiras in the previous fiscal year. 

Obligation Effectiveness

The obligation to file the Country-by-Country Report will apply as of fiscal years beginning on January 1, 2025, establishing an important milestone in the Honduran tax policy. 

Report Structure

The agreement details three model tables for the report: 

  • Distribution of Results and Taxes by Jurisdiction.
  • List of MNG Member Entities
  • Additional Information

Each section is designed to gather detailed data on revenues, taxes, employees, and business transactions for each MNG entity in all jurisdictions in which it operates. 

Closing: Implications of the New Measure

The implementation of Agreement SAR-653-2023 is a significant leap forward in Honduras’ commitment to tax fairness and international transparency. MNGs must be prepared to comply with these new obligations, facing sanctions in case of non-compliance. This framework not only contributes to a more equitable tax system in Honduras but also fosters an environment of international cooperation against tax avoidance. 

Focusing on a more transparent future, Honduras is positioning itself as a leading example in the region, demonstrating the effectiveness of measures to ensure that multinational groups contribute to the country’s economic and social development fairly.