Tax Reform in Honduras: Key Changes Under Discussion

The National Congress of Honduras continues debating the proposed reform to the tax legislation, known as the Tax Justice Law. Among the most significant changes are the potential modification of the territorial income tax system and the implementation of the beneficial owner concept, which could redefine how income is taxed and who a taxpayer is. 

Currently, Honduras imposes taxes under the principle of territoriality, meaning that only income generated within the country is taxed. However, the reform seeks to modify this principle and introduce a worldwide or universal income tax, by which Hondurans would be taxed not only on income earned within the country but also on income obtained abroad. 

Regarding the concept of beneficial owner, this measure aims to promote greater information exchange between countries. Honduras has been moving in this direction since last year, when it approved the requirement for Country-by-Country Reporting for multinational companies. The goal of this measure is to facilitate the exchange of information between countries, which would simplify tax procedures and improve transparency in identifying the ultimate beneficiaries of economic operations. 

Since the legislative discussion is still ongoing, it is important to stay informed about how the final version of the reform will evolve. We will continue monitoring the progress of these debates and provide timely updates on the changes until final approval. 

The information provided by ARIAS® is presented for informational purposes only. This information is not legal advice and is not intended to create, and does not constitute, an attorney-client relationship. Readers should not act upon this information without seeking advice from professional advisers.