Customs Agreement DE-050-2020

SCOPE OF APPLICATION. This Agreement is applicable to all trade operators who submit themselves to authorization as an Authorized Economic Operator (AEO), in accordance with the provisions established in the Central American Uniform Customs Code (CAUCA) and its Regulations, Tax Code and other administrative provisions issued by the Honduran Customs Administration for this purpose.

PURPOSE. This Agreement aims to establish the administrative provisions applicable to the authorization process of Authorized Economic Operators in Honduras, as a way to guarantee the security of the logistics chain and contribute to facilitating international trade operations.

DEFINITIONS: For the purposes of this Agreement, the following shall be understood as: a. LOGISTICS CHAIN ACTOR: Any natural or legal person who, due to the nature of their functions or business, intervenes directly or indirectly in international merchandise trade, such as: manufacturers, importers, exporters, transporters, customs agents, customs warehouses, express delivery or Courier companies, cargo consolidators or deconsolidators, ports, airports and others as established by the Honduran Customs Administration. b. HONDURAN CUSTOMS ADMINISTRATION: In accordance with Article 195 of the Tax Code, the Honduran Customs Administration is a deconcentrated entity of the Presidency of the Republic, with functional, technical, administrative and national security autonomy, with its own legal personality, responsible for the control, verification, inspection and collection of taxes, with authority and competence at the national level and domiciled in the capital of the Republic of Honduras. c. LOGISTICS CHAIN: All trade operators that intervene in the production and logistics processes of international distribution of merchandise, from the origin or place of origin to the end consumer or client. This includes, without the present list being limiting, manufacturers, producers, exporters, importers, land transporters, shipping agencies, air cargo agents, customs agents, warehouse deposits, port facilities, express mail companies, etc. d. CAUCA: Central American Uniform Customs Code. e. SELF-ASSESSMENT QUESTIONNAIRE: List of security requirements with which the interested party conducts a self-assessment to determine its degree of compliance, prior to submitting its application for authorization as an Authorized Economic Operator. f. AUTHORIZATION: Resolution issued by the Honduran Customs Administration, by which it is resolved to authorize the interested party as an Authorized Economic Operator (AEO). g. DISQUALIFICATION: The authority of the Honduran Customs Administration to temporarily cease the benefits granted through authorization as an Authorized Economic Operator, for non-compliance with the obligations established in the current customs legal framework and this Agreement for these purposes. h. TRADE OPERATOR: The natural or legal person, national or foreign, who voluntarily submits an application to the Honduran Customs Administration to be authorized as an Authorized Economic Operator in Honduras, in their capacity as owner, legal representative, and who participates in the import or export logistics chain. i. AUTHORIZED ECONOMIC OPERATOR (AEO): The trade operator who, having voluntarily submitted to the compliance with the requirements and conditions established in the current customs regulations and the provisions of the Honduran Customs Administration, is authorized as such, obtaining facilitation benefits in the clearance of merchandise. j. RECAUCA: Regulations of the Central American Uniform Customs Code. k. MUTUAL RECOGNITION: Member States shall recognize the authorized economic operator of another Member State when they have signed the corresponding Mutual Recognition Agreement or Arrangement. l. RENEWAL: Application submitted to the Honduran Customs Administration by the AEO to be authorized again for another equal period. m. SUSPENSION: The authority of the Honduran Customs Administration to suspend for a period of time the benefits granted to those authorized as AEO, for non-compliance with the obligations established in the law and this Agreement.

APPLICATION. The trade operator may submit to the Honduran Customs Administration a voluntary written application to be authorized as an AEO, and must comply with the requirements established for this purpose by the current customs regulations, this Agreement and other administrative provisions issued by the Honduran Customs Administration for this purpose.

REQUIREMENTS. The trade operator interested in obtaining authorization as an AEO must comply with the following requirements:

• a)

  Have a minimum of three (3) years of operations in international trade in the Member State;

• b)

  Have sufficient financial availability to meet its commitments according to the nature and characteristics of the type of economic activity developed, which allows it to meet its obligations and have resources to ensure the logistics chain of merchandise. For this purpose, it must submit financial statements from the last three (3) years;

• c)

  Demonstrated compliance with the tax and customs legal framework during the last three (3) consecutive years prior to the date of submission of the application, which may be referenced in the history provided by the competent authorities of the country of origin of the company;

• d)

  Have an adequate administrative management system and records of its commercial operations that allow for the performance of customs service controls;

• e)

  Have adequate protection and security measures in relation to cargo, personnel, business partners, information technology, transportation, facilities, as well as training and awareness of personnel;

• f)

  In the case of legal persons, prove and maintain before the Honduran Customs Administration, for all purposes, a legal representative or attorney-in-fact with sufficient powers of representation;

• g)

  Implement the use of advanced control technologies in matters of security, according to the size and commercial activity of the company;

• h)

  Others as established by the Honduran Customs Administration in the Manual of Procedures for the authorization of the AEO and this Agreement.

REVIEW OF DOCUMENTS AND COMPLIANCE WITH REQUIREMENTS. The Honduran Customs Administration through the administrative unit OEA, shall begin with verification of compliance with requirements and review of the information provided by the interested party. When the commercial operator fails to comply with one or more of the established requirements or formalities, the Honduran Customs Administration shall require the documentation within a period of ten (10) business days to continue with the process. Upon expiration of the aforementioned period without the interested party complying with what was required, the file shall be archived without further proceedings.

VALIDATION. A procedure by which the commercial operator, its areas of responsibility in the logistic chain with respect to its business model and all relevant procedures it uses, are subject to a complete and transparent examination before the administrative unit OEA. The validation shall be carried out following prior scheduling and communication to the commercial operator, which may be conducted in person at its physical facilities, or through virtual or remote means, provided that verification of compliance with the requirements of the administrative management system and the records of its commercial operations is guaranteed.

REEVALUATION. The commercial operator in which remediable non-compliance is found in the short term (maximum 3 months) may be subject to a reevaluation; the established period may be extended, which shall not exceed half of it, at the request of the interested party. If after the period has elapsed and the reevaluation has been conducted, the interested party persists in non-compliance with the requirements, a resolution shall be issued denying the enablement request; and it may be submitted again at any time after having remedied the grounds that gave rise to the denial of the request.

TECHNICAL OPINION. The administrative unit OEA shall issue the technical and expert opinion regarding the findings encountered in the enablement process of the interested party, indicating whether or not it is appropriate.

ENABLEMENT. The Honduran Customs Administration shall issue the corresponding Resolution within a period of one month, counted from the moment the file is in a condition to be resolved; enabling as OEA only those interested parties that comply with the requirements established in Resolution 368-2015 of COMIECO, the present regulations and other requirements or legal documents issued by the Honduran Customs Administration for this purpose. In the event that an enablement resolution is notified, it must state that the period to operate as OEA shall be granted for three (3) years counted from the date of notification. This enablement may be renewed for equal and successive periods at the request of the OEA, prior validation of compliance with the requirements. The enablement of the OEA is discretionary to the Honduran Customs Administration.

RENEWAL REQUEST. The AEO shall submit a renewal request with a minimum period of three (3) months prior to the expiration of the term to operate as such; except in case of fortuitous event or force majeure, which must be duly accredited before the Honduras Customs Administration. Upon receipt of the request, a new process shall be initiated to renew the validity of the authorization as AEO. In the event that the AEO does not request the renewal of its authorization in a timely manner, the benefits obtained as an AEO shall be extinguished by the mere passage of the term of validity of the authorization granted. To be authorized again, it must submit an authorization request complying with the entire process.

WITHDRAWAL OF THE REQUEST. The economic operator may withdraw from its authorization as AEO at any time during the process by means of written communication, stating the facts for which it is being made and may submit a new request after six (6) months have elapsed following the date of its withdrawal.

OBLIGATIONS. The following are obligations of the Authorized Economic Operator, duly authorized by the Honduras Customs Administration and without prejudice to those that during the development of the Program shall be established by the foreign trade authorities:

• 1)

  Keep records of all acts, operations and customs regimes in which they intervene, in the form and means established by the Honduras Customs Administration;

• 2)

  Preserve and maintain at the disposal of the Honduras Customs Administration, the documents and information related to its management, for a period of four (4) years;

• 3)

  Exhibit, at the request of the Customs Authority, the accounting books, their annexes, files, accounting records and any other information of tax or customs significance and the electronic files, magnetic media or similar that support or contain that information;

• 4)

  Electronically transmit customs declarations and complementary information related to the acts, operations or customs regimes in which they participate;

• 5)

  Comply with the formats and procedures for the electronic transmission of data, following the requirements for integration with the computer systems used by the Honduras Customs Administration;

• 6)

  Verify the conditions and status of packaging, seals, closures and other security measures of goods and means of transport and immediately communicate to the Honduras Customs Administration any irregularity, when they are required to receive, store or transport goods;

• 7)

  Present annually current tax clearance extended by the competent authorities, to accredit that they are current in the payment of their tax obligations, no later than June 30 of each year;

• 8)

  Accredit before the Honduras Customs Administration the employees who will represent their customs management;

• 9)

  Safeguard fiscal interest;

• 10)

  Maintain offices in the State Party and communicate to the Honduras Customs Administration any change in its tax domicile, its legal representatives and any other information supplied that requires updating;

• 11)

  In the case of legal entities, accredit and maintain before the Honduras Customs Administration, for all purposes, a legal representative or attorney-in-fact with sufficient powers of representation;

• 12)

  Implement international security standards in the logistics chain;

• 13)

  Determine and document appropriate security measures in accordance with its commercial activity, such as closed-circuit television system, satellite global positioning system, among others, with connection to the Customs Service in critical areas related to international trade operations and guarantee their compliance and updating. Such system must have sufficient capacity to store continuous information of its operations for up to three (3) months;

• 14)

  Adopt appropriate security measures in terms of information technologies to protect the computer system used from any unauthorized intrusion, as well as take the necessary measures to ensure the security and proper preservation of records and documents related to customs operations subject to control;

• 15)

  Submit the reports required by the Honduras Customs Administration, on foreign trade actions that affect its authorization as AEO;

• 16)

  Present to the Honduras Customs Administration annual self-assessment, through a form established for such purposes within ten (10) business days after having completed one year of its authorization, taking as reference the date of notification that authorizes it as AEO;

• 17)

  Collaborate with officials or employees of the Honduras Customs Administration who carry out validations in person, virtually or remotely to verify compliance with security standards in the merchandise logistics chain and the administrative management system of its commercial operations, providing information and records that evidence its compliance;

• 18)

  In the event that relevant changes occur in the infrastructure of the facilities, the AEO must submit detailed and updated plans in printed and electronic form, in PDF, JPG or similar format, that allow the identification of entry and exit accesses, cargo storage areas, administrative areas, production areas, parking lots, evacuation routes, physical location of electronic security devices, computer server room, monitoring center and other areas established by the Honduras Customs Administration; within ten (10) business days after the modification;

• 19)

  Collaborate with the validation that the AEO administrative department will conduct on compliance with minimum security standards;

• 20)

  Keep updated the security standards that guarantee compliance with the requirements established for obtaining authorization as AEO;

• 21)

  Conduct internal audits as established in the company's annual audit plan; which allows verification of compliance with security standards, as well as preventive and corrective actions identified to improve processes;

• 22)

  Inform the Honduras Customs Administration in writing of any change in its operations that affects compliance with requirements. Changes that must be reported shall include, among others, those related to infrastructure, services and those acts and contracts that must be registered with the Commercial Registry when applicable, within ten (10) business days following when they are made or registered;

• 23)

  Inform the corresponding authorities in case of anomalies that may influence or affect security in the merchandise logistics chain within a period of no more than twenty-four (24) hours in the email that the Honduras Customs Administration establishes in this regard in the authorization resolution;

• 24)

  Appoint the responsible person and an alternate (in case the responsible person is absent) to act as direct liaison to the Honduras Customs Administration, which shall be recognized as the point of contact;

• 25)

  Attend trainings related to the AEO program indicated by the Honduras Customs Administration;

• 26)

  Comply with administrative provisions formally issued and published by the Honduras Customs Administration related to its obligations and requirements;

• 27)

  Implement the use of advanced control technologies in terms of security, in accordance with the size and commercial nature of the company;

• 28)

  Keep updated, accurate, complete and verifiable records on the customs operations it conducts;

• 29)

  Establish a training plan for its personnel to identify possible threats in the logistics chain and preservation of cargo integrity and other threats identified by the Honduras Customs Administration;

• 30)

  Apply biosecurity measures (protection, promotion and prevention), intended to maintain health and safety against biological factors and agents;

• 31)

  Those established by customs laws, the Honduras Customs Administration and this Agreement.

RESPONSIBILITY OF THE AEO. The holders who hold the legal representation of the AEO shall be responsible for tax, customs and administrative violations, derived from the acts and omissions in which both they and their employees incur; without prejudice to the civil, administrative or criminal responsibility to which they are legally subject by the commission of a crime.

FACILITIES AND BENEFITS. The facilities and benefits granted to AEOs shall be those specifically established and set forth in the authorization resolution, in accordance with the actor in the logistics chain that it represents, these being of a non-transferable nature, such as:

• a)

  Simplified and expedited procedures for dispatching cargo by supplying minimum information;

• b)

  Possibility of being considered as a first option in tests for implementation of new facilitation projects developed by the Honduras Customs Administration;

• c)

  Reduction in the percentage of control of its declarations and its cargo;

• d)

  Priority in customs controls to which its declarations or cargo are subject;

• e)

  Personalized assistance from the Honduras Customs Administration;

• f)

  Possibility of carrying out the dispatch of merchandise in the facilities of the Authorized Economic Operator or in another place authorized by Customs;

• g)

  Prior notification in case of customs control;

• h)

  Access to facilities provided for in mutual recognition agreements or arrangements;

• i)

  Choice of specific inspection location;

• j)

  Dissemination of its AEO status at the national and international level;

• k)

  Periodic training in customs procedures and security measures in the international logistics chain;

• l)

  Use of the AEO logo;

• m)

  Communication and transmission of updated customs regulations;

• n)

  Priority during contingencies or eventualities in ports or airports; o. Preferential or simplified attention in the management of any administrative procedure or customs operation, presented before the Honduras Customs Administration; p. Those that the Honduras Customs Administration may establish in the authorization and renewal resolutions.

MUTUAL RECOGNITION AGREEMENT OR ARRANGEMENT. The Honduran Customs Administration shall execute with other Customs Services bilateral or multilateral agreements or arrangements for mutual recognition among AEOs, prioritizing States with which the country maintains major commercial relations, by virtue of the provisions of CAUCA and RECAUCA.

DENIAL. The following are grounds for denying an application for AEO authorization:

• a)

  The determination of risk to the security of the logistics chain, prior to investigation and analysis of information conducted by the Honduran Customs Administration;

• b)

  Non-compliance with the legal, tax, and customs framework;

• c)

  For not permitting or not cooperating with personnel of the Honduran Customs Administration;

• d)

  For finding false or altered information and/or documentation that is used to the benefit of the applicant;

• e)

  For non-compliance with the requirements established for authorization in COMIECO Resolution 368-2015, other applicable regulations, and this Agreement;

• f)

  Others as established by the Honduran Customs Administration. In the case of subsection d), a new authorization application may be filed only after three years have elapsed following the denial of the application. In other cases, the applicant may file a new authorization application at any time after remedying the cause that gave rise to the denial of the application. Against resolutions denying authorization, the applicant may file the remedies established in CAUCA, RECAUCA, and the Tax Code.

DISQUALIFICATION. The following shall be grounds for disqualification:

• a)

  Being disqualified in the capacity of Auxiliary of the Customs Public Function, in accordance with the provisions of RECAUCA;

• b)

  Manifest non-compliance with the instructions, agreements, and resolutions issued by the customs authority;

• c)

  When it does not present annual proof of being solvent with the State issued by the competent authorities within the established timeframe;

• d)

  Others as established by the Honduran Customs Administration. Disqualification shall remain in effect for as long as the cause that originated it persists.

SUSPENSION. The following are grounds for declaring the suspension of AEO authorization:

• a)

  Non-compliance with the obligations, terms, and conditions established in COMIECO Resolution 368-2015, this Agreement, and in the AEO authorization resolution;

• b)

  For the determination of a high level of risk in its customs operations, following analysis and evaluation by the Honduran Customs Administration;

• c)

  An administrative, civil, or criminal proceeding is initiated against the owners, representatives, or partners of the AEO concerning Crimes Against Public Finances and Social Security, including smuggling, tax evasion, fraud of subsidies and aid, accounting fraud, Public Health, Crimes Against the Environment, Crimes Against Property, Crimes Against Public Faith, Crimes Against the Economy, Crimes Against the Internal Security of the State, Crimes Against Public Administration, as well as offenses and other crimes applicable under the current Penal Code;

• d)

  To commit by action or omission a formal or material tax infraction with intent causing damage to the public treasury and under the principle of proportionality;

• e)

  For improper use of the facilities granted, and/or permitting them to be used by an actor in its logistics chain not authorized as an AEO;

• f)

  For not providing facilities for the Honduran Customs Administration to verify that it maintains compliance with the requirements and obligations;

• g)

  Failure to timely notify the Honduran Customs Administration of changes in business name or denomination, owner, or Legal Representative;

• h)

  For non-compliance with obligations established by other foreign trade control authorities, or for having been sanctioned by them, with prior notice to the Honduran Customs Administration;

• i)

  The occurrence of an incident in the logistics chain in which the AEO's responsibility is compromised;

• j)

  Failure to inform the Honduran Customs Administration within the established timeframe of changes in its operations that affect compliance with requirements, related among others to infrastructure, services, and those acts and contracts that must be registered with the Commercial Registry;

• k)

  For merger, absorption, or transfer of the AEO with other commerce operators that do not have AEO status;

• l)

  Others as established by the Honduran Customs Administration. The suspension of the AEO shall be carried out by means of a Resolution issued by the Honduran Customs Administration, which shall result in the immediate cessation of benefits and facilities for a period of up to three (3) months counted from the date of notification of the suspension resolution, with the exception of subsection k) in which the disqualification shall continue until the authorization process is completed for the commerce operator that does not have AEO status.

CANCELLATION. The following are grounds for declaring the cancellation of AEO authorization:

• a)

  Failure to remedy within the established timeframe the grounds that gave rise to its suspension;

• b)

  The issuance of an Administrative Resolution that determines the collection of taxes or sanctions in tax and customs matters, with the character of final;

• c)

  The existence of final judicial sentences against the owners, representatives, or partners of the AEO concerning Crimes Against Public Finances and Social Security, including smuggling, tax evasion, fraud of subsidies and aid, accounting fraud, Public Health, Crimes Against the Environment, Crimes Against Property, Crimes Against Public Faith, Crimes Against the Economy, Crimes Against the Internal Security of the State, Crimes Against Public Administration, as well as offenses and other crimes applicable under the current Penal Code;

• d)

  Recurrence in more than one of the grounds for disqualification described in the preceding article and other laws, within a period of one year;

• e)

  Failure to notify the Honduran Customs Administration of the initiation of judicial proceedings in customs, tax, civil, or criminal matters against the commercial company, its legal representative, or its partners;

• f)

  Conclusive proof by the Honduran Customs Administration that the AEO obtained its authorization through the use of irregular or fraudulent means;

• g)

  Loss of the necessary standing to conduct commerce activities, as established in the Commercial Code;

• h)

  Others as established by the Honduran Customs Administration. In the case of subsection d), recurrence shall exist in accordance with the provisions of the Tax Code. AEO authorization shall be cancelled by means of a Resolution issued by the Honduran Customs Administration and may request its authorization again as such after three (3) years have elapsed, counted from the date of notification of the cancellation resolution. Cancellation shall result in the loss of AEO status.

VOLUNTARY CANCELLATION. The OEA may submit a voluntary request for cancellation of the authorization. In this case, the trade operator may request its authorization again after one (1) year has elapsed from the date of notification of the Cancellation Resolution.

REMEDIES. Against Resolutions that deny authorization or determine the disqualification or cancellation of an OEA, the interested party may file the remedies established by CAUCA, RECAUCA and the current national regulations.

IMPLEMENTATION, DEVELOPMENT AND MAINTENANCE. The Honduran Customs Administration is responsible for the implementation, development and maintenance of the Authorized Economic Operator Program in Honduras and may enter into agreements with other State control authorities to make the benefits to OEAs effective.

CONFIDENTIALITY. The information and documentation obtained during the evaluation and validation process for the authorization of the OEA shall be confidential between the Honduran Customs Administration and the interested party and may only be used for the purpose for which it was granted. It is prohibited for officials or employees of the Honduran Customs Administration to disclose or provide information or documents related to the OEA that under the provisions of current national legislation must remain confidential or restricted. The OEA Administrative Department shall be responsible for the management and custody of the files.

RESPONSIBILITY OF EMPLOYEES AND OFFICIALS OF THE CUSTOMS ADMINISTRATION. The officials and employees of the Honduran Customs Administration shall be responsible for their actions, whether negligent or intentional, in the performance of their positions and functions, in accordance with the legislation in force in the country.

ADMINISTRATIVE DEPENDENCY. The Honduran Customs Administration shall designate the administrative dependency that will apply the provisions established for this purpose in the present Agreement, within a maximum period of 10 days counted from the effective date of this Agreement. The dependencies of the Honduran Customs Administration must collaborate with the different requests and proceedings that the OEA administrative dependency carries out in compliance with its functions.

PROCEDURE. The Honduran Customs Administration shall issue the necessary Procedures to implement the provisions of the present Agreement. Furthermore, it may authorize the changes, modifications, and/or updates that are necessary for the efficient functioning of the corresponding administrative and computer system.

DISCLOSURE. The Honduran Customs Administration shall publish on the official website the current regulations, requirements, obligations, benefits, forms, instructions, manuals, and other documents necessary to obtain and maintain OEA certification.

RISK DETERMINATION. The Honduran Customs Administration shall make use of the SAFE Framework and other documents issued by the World Customs Organization (WCO) for the determination of risk in the logistics chain of trade operators.

UNFORESEEN CASES. Unforeseen cases shall be resolved in accordance with applicable national legislation and best international practices regarding OEAs.

PUBLICATION AND EFFECTIVENESS. This Agreement shall enter into force on the day of its publication in the Official Gazette. – LET IT BE PUBLISHED. JUAN JOSÉ VIDES Executive Director Honduran Customs Administration SANDRA PATRICIA FLORES LÓPEZ National General Secretary Honduran Customs Administration