Through Law 254 of November 11, 2021 (hereinafter the “Regulations”), Panama continues to take steps forward in the fight against money laundering, preventing tax evasion and its compliance with international standards by amending certain aspects of Law 23 of 2015 (better known as the Anti-Money Laundering Law) and other laws related to the exchange of information for tax purposes, keeping accounting records and ultimate beneficial owner information and provisions of the Fiscal Code.
Below we highlight the most relevant modifications:
Law 23 of 2015
Law 51 of 2016
Law 52 of 2016
Obligation to maintain accounting records and supporting documentation:
Legal persons not carrying operations perfected, consumed or take effect in Panama, as well as those that are exclusively dedicated to being holders of assets, within or outside of Panamanian territory will also have the obligation to maintain accounting records and supporting documentation.
Minimum timeframe to keep records:
The accounting records and supporting documentation must be kept for five years, counted from the last day of the calendar year in which the transactions for which these accounting records apply were generated.
Annual reporting obligation of the legal entity to the resident agent:
Provide annually the resident agent, by April 30, with the accounting records or a copy of the accounting records relating to the fiscal period that ended on December 31 of the immediately preceding year. You must also provide the contact details and the physical address of where they are kept.
Required accounting records:
Registration related to the change of resident agent or; dissolution of company:
The Public Registry will only register the public deeds for the appointment of a new resident agent that contain an express declaration that the resident agent possesses the originals or copies of the accounting records and supporting documentation or; failing to provide the contact name and physical address where they are kept.
In the event of dissolution of legal entities, the resident agent must declare within the public deed with respect to the five years prior to the registration of the dissolution: (i) it possesses the originals or copies of the accounting records and supporting documentation or; (ii) failing to provide the contact name and physical address where they are kept.
Resident Agent annual reporting obligation:
The resident agent must submit annually a sworn statement by July 15 to the to the General Directorate of Revenue (DGI) including a list of the legal entities for which they exercise the service of resident agent, including the name and unique taxpayer registration number detailing:
Law 129 of 2020
Timeframe to Register Data for Legal Person and Ultimate Beneficial Owner:
Resident agents must register the data of the legal person and the ultimate beneficial owner within a maximum timeframe of 15 business days, following the incorporation of the legal person or the appointment of a new resident agent.
Likewise, any change in the information of the final beneficiary must be notified to the resident agent within 15 business days counted from the date the change became effective, and the resident agent will have 5 business days to update the registry, following the date on which the information was received.
Resignation and Appointment of Resident Agent:
In the event of the resignation of a resident agent, it must notify the Superintendency of Non-Financial Subjects (SSNF) within ten business days following the date of registration of the resignation at the Public Registry. The new resident agent must notify within fifteen business days, following the date of appointment of the new resident agent in the Public Registry of Panama.
Suspension of Corporate Rights:
The corporate rights of a legal person will be suspended when:
The SSNF and the DGI are empowered to order the Public Registry the: (i) suspension of the corporate rights of the legal person that is related to the breach of the resident agent of any of its established obligations, which means that no act may be registered, nor certifications issued Except for those required by competent authority or by third parties to enforce their rights and; (ii) the forced administrative liquidation of the legal entity.
Reactivation of a legal person:
Country by Country Report:
The entity obliged to present annually the Country-by-Country Report related to the groups of multinational companies with consolidated income greater than Seven Hundred Fifty Million euros or its equivalent in dollars within a fiscal period and that resides for tax purposes in Panama, the failure to comply with this obligation within a fiscal period will be sanctioned with a fine of USD$100,000.00.
An additional progressive fine will be applied to the fine originally imposed, in the amount of USD$5,000.00 per day until the violation is remedied.
In cases where the information provided by the obliged entity in the Country-by-Country Report is inconsistent or erroneous, it will be sanctioned with a fine of USD$25,000.00. If the competent authority verifies the information provided in the Country-by-Country Report was intentionally altered, the obligated entity will be sanctioned with a fine of up to USD$500,000.00.
Law 2 of 2011
Law 254 of 2021 repealed Law 2 of 2011.
This Regulation is in full force.
Contact us to clarify any questions regarding the effects on your reporting obligations as a legal entity or as a resident agent.