Agreement 596-2021

This Technical Tax-Customs Instruction has as its purpose to implement an automated mechanism that allows the simplification, expediting, facilitation and control of operations for the transfer of merchandise among beneficiary companies of the Free Trade Zones regime and also the collection of the fee contained in Article 50 of the Law for Strengthening Income, Social Equity and Rationalization of Public Spending.

The rules contained in this instruction are of public order, mandatory observance and of application for all those companies incorporated in the Free Trade Zones regime in all those acts, facts and situations regulated in Article 50 of Legislative Decree No. 17-2010 containing the Law for Strengthening Income, Social Equity and Rationalization of Public Spending, published in the Official Gazette "La Gaceta" dated April 22, 2010 and Article 10 of the Free Trade Zones Law reformed by Decree No. 8-2020, Article 41 of Agreement 41-2020 containing the Regulations of the Free Trade Zones Law.

The terms and definitions applicable to this instruction are: 1. CUSTOMS AUTHORITY: The official of the Customs Service who, due to their position and by virtue of the competence granted, verifies the correct application of customs regulations, complies with them and enforces their compliance. 2. TRANSPORTATION DOCUMENT: For the purposes of this regulation, transportation document is considered to be the bill of lading executed by the transportation company, which contains the specifications of the merchandise and the means of transportation. 3. DUCA D: Format approved by COMIECO through Resolution No. 409-2018 that is used for the importation or exportation of merchandise. 4. SIMPLIFIED DUCA: Format that contains the minimum information required by the Honduran Customs Administration for the temporary or permanent transfer of merchandise between free trade zones. 5. PACKAGING: The special material, transportation elements (such as wrappings, packages and other protective devices for merchandise that prevent possible damage during handling and transportation) or reusable containers that serve for the handling and protection of merchandise used for their transportation. 6. INVOICE: It is a Tax Receipt authorized by the Tax Administration, issued to support the transfer of goods and/or provision of services, whose issuance supports the tax credit of Sales Tax derived from taxable purchases and costs or expenses of Income Tax. 7. REMITTANCE GUIDE: It is a Complementary Document that supports the transfer of goods or merchandise within the national territory, and also supports the existence of merchandise located in warehouses and storage facilities. 8. SAMPLE: A part or small quantity of a good that is considered representative of the whole and that is taken or separated from it using certain methods to submit it to study, analysis or experimentation. 9. OPERATOR: It is a natural or legal person, national or foreign, legally constituted, who, having complied with the requirements established in the Free Trade Zones Law and its Regulations and authorized to operate and administer a Free Trade Zone, is established within the same. 10. USER OPERATOR: It is a natural or legal person, national or foreign, legally constituted, located within the restricted area, authorized to operate, administer a Free Trade Zone and carry out the activities permitted by the Free Trade Zones Law and its Regulations. 11. CUSTOMS CONTROL POST: Space made available in the access area to Free Trade Zones by the Customs Administration for control and surveillance of the operations carried out by companies within the regime, such as temporary admission, exportation, re-exportation, transfer of merchandise among free trade zone companies, internal transits to Customs, for purposes of internation of merchandise to the national territory. In the event of having Reception, Custody, Assessment and Dispatch areas within the company's facilities, the Customs Administration may designate personnel to handle customs operations of naturalization of merchandise that companies transform operating under the benefit within the restricted area, as well as other customs operations of entry and exit of merchandise in their different customs regimes. 12. CUSTOMS CONTROL POST OF FREE TRADE ZONE DESTINATION: It is where an operation of merchandise transfer ends. 13. CUSTOMS CONTROL POST OF FREE TRADE ZONE DEPARTURE: It is the one that initiates an operation of merchandise transfer. 14. CUSTOMS SEAL OR SEALING DEVICE: Device that allows customs to effectively control the security of merchandise. 15. DEFINITIVE TRANSFER: It is the transfer of merchandise within and among Free Trade Zones that does or does not constitute transfer of ownership. 16. TEMPORARY TRANSFER: Transfer of merchandise that does not constitute transfer of ownership, there being in this case the provision of services among Free Trade Zone companies. 17. TEMPORARY TRANSFER OF PACKAGING: It is the special material, transportation elements or reusable containers that serve for the handling and protection of merchandise that are transferred to the different Free Trade Zones, which do not constitute transfer of ownership. 18. TRANSPORTATION UNITS: Any means of transportation that is used for the entry, transit, transfer, transshipment or exit of merchandise to, from or through the customs territory, such as: containers, trucks, tractor trucks, vans, platforms, aircraft or maritime vessels, railroad cars and other similar transportation units. 19. USER: It is any natural or legal person, national or foreign, legally constituted, established in a Free Trade Zone, operated and administered by an operating company or user operator and that is engaged in carrying out the activities permitted by the Free Trade Zones Law and its Regulations. TITLE II ON REGISTRATION, TRANSPORTATION DOCUMENTS AND MERCHANDISE TRANSFER CHAPTER I ON MERCHANDISE TRANSFER REGISTRATION

The Registry of Merchandise Transfers is created in the customs informatics system, in which all operations related to the transfer of merchandise among operator-users or users of Free Trade Zones shall be registered. The information supplied in the customs informatics system shall be in accordance with the format of the Central American Unified Customs Declaration with the minimum data required by the Honduran Customs Administration. For control purposes, a sequential reference number shall be assigned to the DUCA which may be pre-printed or electronic and shall be composed of the letters ZL.

The Customs Authority may authorize the transfer of merchandise among operator-users or users in a definitive or temporary manner. The movement of merchandise among Free Trade Zone companies, whether temporary or definitive in form, shall be carried out under the transfer operation, and shall comply with the customs formality through the presentation of a simplified merchandise declaration, in accordance with the provisions of Article 41 of Agreement 41-2020 containing the Regulations of the Free Trade Zones Law.

In definitive and temporary transfers of merchandise, whether with or without transfer of ownership, it shall be supported by commercial invoice or remittance guide and transportation document, as applicable.

The presentation of the transportation document is excepted in the following cases: a. When the means of transportation used for the transfer of merchandise is registered with the Honduran Customs Administration under the Free Trade Zone code. b. When the transfer is carried out among companies located within the same Free Trade Zone.

The definitive transfer of merchandise within and among Free Trade Zones may or may not constitute transfer of ownership.

For the definitive transfer of merchandise that constitutes transfer of ownership, the transferring company shall register in the Customs Informatics System a simplified merchandise declaration, which shall be supported by the commercial invoice and transportation document when applicable. The collection of five dollars (US$5.00) or its equivalent in lempiras for data transmission shall be applied in the transfer of merchandise under the definitive modality.

In the transfer of merchandise that does not constitute transfer of ownership, it shall be supported by the remittance guide and transportation document when applicable, and the presentation of the commercial invoice is excepted. The collection of five dollars (US$5.00) or its equivalent in lempiras for data transmission shall be applied in the transfer of merchandise under the definitive modality.

Definitive transfers of merchandise and containers, packaging, containers or others that will be returned to the transferring company may be included in the same Simplified Merchandise Declaration when these do not form part of the sale, which shall be supported by a remittance guide.

In definitive transfers of merchandise among companies of the same group (holding) that do not constitute transfer of ownership, the simplified merchandise declaration shall be supported by a remittance guide and the transportation document. When the transfer of merchandise constitutes transfer of ownership, the simplified merchandise declaration shall be supported by commercial invoice and transportation document when applicable. The collection of five dollars (US$5.00) or its equivalent in lempiras for data transmission shall be applied in the transfer of merchandise under the definitive modality.

Merchandise that has not been subjected to a production process may be returned to its place of origin through the procedure of a definitive transfer.

The temporary transfer of merchandise does not constitute transfer of ownership, there being in this case the provision of services among Free Trade Zone companies.

For the temporary transfer of merchandise among Free Trade Zone companies, the transferring company shall register in the customs informatics system a simplified merchandise declaration. When the transfer is carried out among companies located in different Free Trade Zones, the simplified merchandise declaration shall be supported by the remittance guide and transportation document in those cases where it applies. When the means of transportation used is not registered with the Honduran Customs Administration to transport merchandise among Free Trade Zones under the Free Trade Zone Code, if the transfer is carried out among companies located within the same Free Trade Zone, it shall only attach the declaration and remittance guide. The collection of five dollars (US$5.00) for data transmission or its equivalent in lempiras shall be applied in the transfer of merchandise under the temporary modality.

The temporary transfer of merchandise must include the containers, packaging, receptacles or others that serve for their transport, which return to their place of origin, provided that the same are returnable and may be included within the same Simplified Merchandise Declaration. TITLE III CONSOLIDATION AND STORAGE OF MERCHANDISE CHAPTER I TRANSFER OF MERCHANDISE FROM COMPANIES PROVIDING CONSOLIDATION AND STORAGE SERVICES

Companies under the Free Trade Zone regime authorized to develop consolidation activities and storage of merchandise, destined for Free Trade Zone companies, shall carry out the transfer of the same in a definitive manner. Prior to the transfer of merchandise, the company that provides any of the activities indicated above, must register in the customs computer system a simplified merchandise declaration, which must be accompanied by the following documentation: a. Companies authorized by the competent authority to provide cargo consolidation services among beneficiary companies of the regime or from abroad, shall support the transfer of merchandise with the commercial invoice issued by the foreign supplier and the transport document issued by the company as consolidator. b. Companies authorized by the competent authority to provide storage services shall support the transfer of merchandise with the commercial invoice issued by the foreign supplier and a shipping guide. c. The transfer of merchandise carried out by a Free Trade Zone company to a warehouse that operates under the same regime, through the temporary transfer figure, shall be supported with the simplified declaration under Temporary Transfer with which it arrived and a shipping guide. The charge of five dollars (US$5.00) for data transmission or its equivalent in lempiras, shall be applied in the transfer of merchandise under the definitive modality. CHAPTER II TRANSFER OF MERCHANDISE FOR COMPANIES PROVIDING CONSOLIDATION SERVICES FOR EXPORT

Free Trade Zone companies that export merchandise through companies authorized to provide consolidation services to Free Trade Zone users shall transfer the merchandise object of export in a definitive manner, by means of a simplified merchandise declaration, which shall be supported by the commercial invoice issued in favor of the client abroad and transport document, when the means of transport used is not registered in the Customs Administration to transport merchandise between Free Trade Zones under the Free Trade Zone Code. The charge of five dollars (US$5.00) for data transmission or its equivalent in lempiras, shall be applied in the transfer of merchandise under the definitive modality. TITLE IV PROVISION OF SERVICES, SAMPLES AND CUSTOMS SEALS CHAPTER I PROVISION OF SERVICES TO FOREIGN COMPANIES

In the provision of services for transformation, preparation, elaboration, repair or any other service provided by Free Trade Zone companies to foreign companies, once the process is completed, the merchandise may be transferred to other Free Trade Zone companies. When there is transfer of ownership, the registration of said merchandise must be carried out by means of the simplified merchandise declaration and supported with a shipping guide and commercial invoice. In case there is no transfer of ownership, the simplified merchandise declaration shall be supported only with a shipping guide. The charge of five dollars (US$5.00) for data transmission or its equivalent in lempiras, shall be applied in the transfer of merchandise under the service provision modality.

When merchandise is transferred to Free Trade Zone companies to provide them with other services, it must be sent following the procedure established in this agreement, concerning temporary transfers and return of merchandise. CHAPTER II TRANSFER OF SAMPLES

For the transfer of samples within and between Free Trade Zones, the transferring or sending company must issue a shipping guide in which the characteristics of each sample are detailed; this transfer shall have no commercial value. The Customs Authority of the Free Trade Zone may authorize the exit of samples with the same conditions and characteristics, which must be marked by means of cuts, punctures, impressions or other means that allow identification that the item is a sample and of eventual operations destined to the same company. In case it is not possible to mark the sample by means of the mechanisms described above, the Customs Authority of the Free Trade Zone may authorize a maximum of five (5) units of the same product, provided that it is proven that the product is a sample. The registration of said merchandise must be carried out by means of the simplified merchandise declaration and supported with a shipping guide. The customs value to be reported in the customs computer system shall be determined by the transferring company. When the sample is returnable, it may return in the same declaration that was initially sent, and shall not require the cost for data transmission. The charge of five dollars (US$5.00) for data transmission or its equivalent in lempiras, shall be applied in the transfer of merchandise under the modality of sample transfer. CHAPTER III CUSTOMS SEAL OR CUSTOMS PRECINCT

The transport units used in the transfer of merchandise between Free Trade Zone companies must have the conditions that permit placement of the customs seal or customs precinct.

In the transfers of merchandise that by their nature would not be possible to place customs seals or precincts on the transport units, the Customs Authority determines the following conditions: a. Verification of merchandise and taking of samples, b. Identification signals on each bundle, c. Use of tarps, straps, d. Special fasteners and other components for securing the cargo, e. Verification that the transport unit cannot be sealed with a customs seal,

In the transfers of merchandise referred to in the preceding article, the following conditions must be complied with:

• a)

  That they be easily identifiable by their marks and manufacturing numbers, which for this purpose must bear in visible places, marked permanently and that do not admit visible alterations;

• b)

  That they cannot be substituted, totally or partially, nor can their component parts be removed without said maneuver being evident;

• c)

  That the packaging be appropriate and resistant;

• d)

  That the documentation that supports them describe, without giving rise to confusion, the characteristics of the merchandise.

The reusable transport elements or containers that served for the handling and protection of merchandise during transfer must be returned by the receiving Free Trade Zone company with the simplified merchandise declaration with which they arrived, and must additionally be supported with the shipping guide and shall not require payment for data transmission.

The merchandise transferred temporarily to a Free Trade Zone company that will provide the requested services or processes, once completed, the receiving company shall return the merchandise to the transferring company with the simplified merchandise declaration with which it arrived, these may be total or partial, adding to the declaration the transformed product and the respective item, in accordance with the new process to which the good subject to return was submitted, in this case shall not require payment for data transmission. The declaration must be supported with a commercial invoice declaring the value of the services provided or processes requested, adding a shipping guide.

The deadline limit for the return of merchandise shall be twelve (12) months counted from the date of acceptance of the transfer operation covered by a simplified merchandise declaration.

At the request of the transferring company, the Customs Authority of the customs post controlling the Free Trade Zones may extend the deadline established in the preceding article, in the Customs Computer System, in accordance with the following circumstances: a. When it is a matter of fortuitous event or force majeure duly proven, b. When it is transfers by companies authorized to provide a machinery and equipment rental service, the computation of the deadline shall be in accordance with the contract and the addendum, if any, that have been agreed upon between the parties.

Non-compliance with this deadline by the receiving company shall result in the Customs Computer System not permitting new registrations related to this process, until it registers the return thereof. CHAPTER II MERCHANDISE SUBJECT TO RETURN BY REJECTION

When the receiving Free Trade Zone returns merchandise subject to rejection, this may be total or partial, and the rejection must be justified. When it is a matter of return of merchandise due to partial or total rejections, the return shall be made under the same simplified merchandise declaration and shall not require payment for data transmission. The return of merchandise may be carried out in the same or another transport unit with which it arrived at the destination Free Trade Zone, which must be duly sealed with customs seals; in case the merchandise by its nature cannot be transferred in closed transport units, compliance with the provisions established in Chapter III of this agreement must be made.

Merchandise enters into a condition of rejection in the following cases: a. For being defective or damaged, b. For not complying with technical and quality specifications, c. Any other cases established between transferring and acquiring companies. Free Zone companies shall accredit before the Customs Authority the rejection conditions mentioned above.

Rejections, whether total or partial, must be made in the Customs Informatic System by the sending companies or owners of merchandise and receiving companies, using the same Simplified Merchandise Declaration with which they were sent. TITLE VI CHAPTER I RETURN OF MERCHANDISE FROM THE USE OF MEANS OF TRANSPORT IN THE TRANSFER OF MERCHANDISE

The transfer of merchandise between users of one Free Zone to another Free Zone may be carried out in transport units that are the property of the companies and that are duly registered with the Honduran Customs Administration. Additionally, they may use other means of transport registered as Auxiliaries of the Public Function in the modality of customs transporters.

In the same means of transport, merchandise may be transferred to two or more companies located in the same Free Zone or other Free Zones.

In cases of transshipment of merchandise from one transport unit to another at any point in the route, the transporter or owner of the merchandise shall notify by any means of communication the Customs Authority of the nearest Free Zone about what has occurred and the latter shall draw up a record by means of an official report and shall authorize the transshipment, being required to place a new customs seal or precinct when appropriate according to the nature of the merchandise. The transshipment shall be carried out under the same simplified merchandise declaration and shall not require payment for data transmission.

In the case of change of the motive traction equipment of the transport unit due to mechanical breakdown or traffic accident during the route, the transferring company shall update in the customs informatic system the data of the new transport unit, without placing new precincts.

The means of transport used in the transfer of merchandise between Free Zone companies shall comply with the following:

• a)

  Security in closing devices,

• b)

  That they permit placing customs seals or precincts,

• c)

  That they do not permit the extraction or introduction of merchandise,

• d)

  That they do not have false compartments.

In the course of the transfer operation, if merchandise is unloaded and customs cleared in different Free Zones, a new customs seal or precinct shall be placed in order to secure the cargo destined for the following free zones. In cases where the precinct, transport unit, or merchandise present signs or indications of having been forced or violated, the customs official shall inspect the transport unit, the merchandise, and shall draw up an official report for the applicable legal effects.

The company that registered the transfer operation through the simplified merchandise declaration shall present it to the Customs Authority of the control post of the Free Zone. The Customs Authority of the Free Zone, prior to authorizing exit in the customs informatic system, shall verify the merchandise, the means of transport, and other corresponding data, being required to place the seal when appropriate. CHAPTER II OF THE ARRIVAL OF MERCHANDISE

The transporter, upon arrival at the customs post located in the destination Free Zone, shall present the merchandise, transport units, and the declaration within the period established by the Honduran Customs Administration, which shall be determined in accordance with fiscal routes.

The computation of the period for the transfer of merchandise shall commence from the authorization of exit recorded in the customs informatic system by the Free Zone. Non-compliance with the period established by the Honduran Customs Administration shall give rise to an administrative penalty to the transporter, in accordance with what is established in the Tax Code. The penalty shall not be applicable in proven cases of force majeure or act of God.

The Customs Authority of the destination free zone shall verify the following:

• a)

  That the seal or precinct and the transport unit correspond to what is established in the "Declaration";

• b)

  That the precinct and the transport unit do not present signs or indications of having been violated or irregularly manipulated;

• c)

  That the merchandise corresponds to that declared when it has been transported in non-sealed transport units. If there is any irregularity, the means of transport shall be inspected and the corresponding administrative measures shall be taken. If no irregularity is found, the customs authority shall perform the arrival control in the customs informatic system.

The receiving company shall confirm the arrival of the merchandise in the customs informatic system, accrediting its conformity with the same.

The implementation of this modality under this simplified process does not interfere with what is established in Article 3, subsection b) of Decree 31-2018.

The Honduran Customs Administration shall adapt its informatic systems for the implementation of this instruction.

The Honduran Customs Administration shall guarantee the proper functioning of the process in order to have appropriate traceability of the cargo registered in the customs information system; in addition to applying the respective customs formalities and controls.

During the transition period of the present instructive, the activities between free zones that were initiated with previous procedures shall be processed and concluded with the same procedure with which they were initiated until their completion.

The Secretariat of State in the Office of Finance (SEFIN) in coordination with the Honduran Customs Administration, must make the changes, modifications, and/or updates of the present instructive that are necessary for its efficient application.

This Agreement shall enter into force on the day of its publication in the Official Gazette "La Gaceta." COMMUNICATE AND PUBLISH, LUIS FERNANDO MATA ECHEVERRI SECRETARY OF STATE FANNY LUCÍA MARADIAGA VALLECILLO GENERAL SECRETARY