Executive Decree No. 25 of 2026 amended the definition of “Controlling Persons” for FATCA and CRS purposes in Panama by lowering the ownership threshold from 25% to 10%. The amendment aligns Panama’s reporting framework with the beneficial ownership standards recommended by the Financial Action Task Force (FATF) and strengthens tax transparency.
What Are FATCA and CRS?
The Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS) are international frameworks for the automatic exchange of financial account information.
They require financial institutions to identify and report certain account holders and the controlling persons of specific entities, supporting international cooperation in combating tax evasion.
Who Are Controlling Persons?
Controlling Persons are the natural persons who ultimately exercise direct or indirect control over an entity and correspond to the concept of the beneficial owner.
Identifying these individuals enables financial institutions to determine who must be reported under the FATCA and CRS regimes.
What Changed Under Executive Decree No. 25 of 2026?
The main change is the reduction of the ownership threshold used to identify Controlling Persons.
Under the new regulation:
- The ownership threshold is reduced from 25% to 10%.
- The definition is aligned with Panama’s beneficial ownership framework.
- FATCA and CRS reporting requirements are harmonized with FATF recommendations.
The objective is to eliminate regulatory inconsistencies while strengthening compliance with international tax transparency standards.
Who Is Affected by This Amendment?
The new rules primarily affect:
- Financial institutions subject to FATCA and CRS.
- Companies with foreign ownership.
- International corporate groups.
- Legal structures required to identify beneficial owners.
In practice, the operational impact is expected to be limited, as many financial institutions were already applying the 10% threshold for customer due diligence and beneficial ownership identification.
What Should Companies with Foreign Shareholders Review?
Companies should review their corporate records and update their beneficial ownership information and self-certifications to reflect the new 10% ownership threshold.
A proactive review can facilitate compliance with reporting obligations and reduce the risk of observations during regulatory or tax authority reviews.
How Can LAC Tax Help?
At LAC Tax, we advise financial institutions, multinational groups, and investors on: