Emerging Markets Rates and Currencies Handbook

Non-Resident Restrictions: Foreign entities are not allowed to trade derivatives or cash transactions; they have to open local bank accounts in order to transact, and in order to open the account they have to operate in the country. FX transactions are allowed. License Requirements All FX transactions have to be reported to the Central Bank by financial institutions at the end of the day. Corporates are required to report and comply with regulation regarding repatriation of foreign currency related to exports. Requirements to open a foreign currency account Only local companies with presence or operations in the country are allowed to open USD or EUR accounts. Deal Management Rollover: Rollovers are possible for NDFs and are net settled. Unwinding: Possible to unwind NDFs, They are net settled. Early Maturity: Possible, net settled. Documentation Requirements FX Spot: For spot Transactions depending on the amount, when bidding in the auction process an amount above 300,000 USD (current threshold as of end of May 2023) additional information, such as invoices and purpose of FX transaction are required to be provided by the buyer. NDF (on-shore): At the time only Non-Deliverable Forwards (NDF) are locally traded. An NDF Contract has to be signed with Citi’s subsidiary in Honduras. Although no maximum tenor is established, due to limited liquidity tenor is usually below 1.5 years. Trade Flows Purchases: - Daily, up to USD 1.2 MM can be purchased directly from banks. Sellers: - No restrictions. Capital Flow and FDI FDI inflows have to be reported to the Central Bank. The transfer processing instructions/description has to state that the purpose of transfer is for FDI. Banco de Honduras, S.A. Edificio Agalta, Nivel 15, Boulevard Morazán. Tegucigalpa, M.D.C., Honduras, C.A. FX Sales Contact: +504 22902154 Tax Summary – Honduras Honduras Country Tax Deductibility and Considerations Inter-Co Debt Offshore Bank Loans Offshore Local Derivatives Equities Borrowing W/H Tax • 10% WHT • No WHT • 10% WHT on net settlement amount • 10%WHT on dividends. Deductibility of interests • Not deductible • Fully deductible assuming general deductibility rules are met. • Deductible assuming general deductibility rules are met. • N/A Deductibility of (FX) Losses • FX gain/loss only applicable to on-balance positions • N/A Other Taxes/Duties • 0.20 % special tax on wire transfers to third parties • N/A Comments • N/A • N/A • N/A • N/A • N/A Note: Citigroup Inc. and any of its affiliates do not provide accounting, tax, or legal advice. Please seek advice from a relevant licensed advisor. Source: Relevant legislation, publicly available sources