shareholders; amounts of shares sometimes are missing and/or do not sum to 100%; and the information is mostly static, with few firms ever updating their shareholder list. Under these constraints, we build the best approximation for a comprehensive list of shareholders in all corporations in Honduras.

This list of shareholders include not only individual shareholders, but also corporations that own shares in other corporations. In order to assign profits to individuals, we perform a recursive exercise of identifying corporations that are owned by other corporations; identifying the individual shareholders of these other corporations; and then assigning their participation in the original firm.

Our resulting dataset includes approximately 800,000 relationships at the shareholdercorporation level, representing over 115,000 corporations and 200,000 individual shareholders. As presented in Table B1, in recent years only _≈_ 30,000 corporations file income taxes every year – our shareholder list includes many firms that no longer exist, but that does not affect the distribution of income in any given year since that requires a firm to file a CIT declaration.

We then proceed to merge the shareholder list to yearly CIT declarations from corporations, creating a database at the individual-corporation-year level, restricting our sample to corporation-years where firms filed a CIT declaration. If we focus on 2019, the most recent year in our data, we observe 31,879 firms (95% of those filing CIT) with their respective 103,000 shareholders. In terms of aggregate profits, we document in column (5) that in most year we are able to distribute 80 - 90% of total profits to some shareholder in our database (ratio between columns (5) and (4))<sup>1</sup> . However, a much smaller share of total profits can be distributed to shareholders with a valid domestic identification number, as we document in column (6) – in 2019, only L14 billion in profits can be assigned to individuals with a national ID, out of L40 billion assigned to some shareholder. The main reason for that discrepancy (which can be massive in some years like 2018) is that some of the most profitable corporations in the country are owned by foreign shareholders, many of them corporations themselves. This is income that is not flowing to national taxpayers that can be linked to our other datasets compiling income from other sources, and therefore is not included in our study.

Finally, we highlight that these aggregate of assigned corporate profits refer to the entire dataset of taxpayers in Honduras, only a small share of which is actually used when we combine our tax records with household In as docu- survey. every year, mented in Table C2, the total amount of corporate profits in the final microdata is much larger than the aggregate in Table B1, since individuals being assigned large losses are as a rule not at the top of the distribution, so by construction we end up

> 1In some years the amount of profits assigned to individuals is larger than the total profits. This can happen since profits are often negative – being unable to distribute negative profits from a firm, everything else equal, will increase the total amount of assigned profit in comparison with total profits.

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