Executive Decree No. 177 of 2024 regulates Law 52 of 2016, establishing new provisions on the obligation of legal entities to annually document their financial situation and ensure the safekeeping of their accounting records. This regulation, specifically aimed at companies operating outside of Panama, aims to strengthen tax transparency and ensure compliance with international standards, contributing to the fight against tax evasion and strengthening international cooperation.
Background and legal basis: Since 2009, Panama has been a member of the Global Forum on Transparency and Exchange of Information for Tax Purposes, whose objective is to combat tax evasion through the exchange of information between jurisdictions. As part of this commitment, Law 52 of 2016 and its amendment, Law 254 of 2021, reinforce the obligation of jurisdictions to maintain updated and detailed accounting records.
What does the new regulation establish? This decree reinforces companies’ obligation to maintain clear and detailed accounting records, aligned with their economic activity. Resident agents must ensure that their clients comply with these requirements to facilitate tax transparency.
This regulation applies to all corporations, limited liability companies, private foundations, and other legal entities incorporated under Panamanian law that do not conduct operations within the country or that are exclusively dedicated to holding assets within or outside Panamanian territory, including those that do not have any type of movement or transaction.
Main changes to consider:
- Obligation to maintain up-to-date records: Companies must document their economic activity accurately and support it with adequate documentation.
- Delivery deadlines:
o Periods 2021, 2022 and 2023: Until March 31, 2025.
o Period 2024: Until April 30, 2025. - Affidavits: These can now be signed by beneficial owners, legal representatives, or board members.
- Penalties: Fines of between US$5,000 and US$1,000,000 are established for non-compliance.
Who is affected by this change? The decree is specifically aimed at companies operating outside of Panama and required to comply with international tax transparency standards. If your company falls into this category, it is essential to ensure you comply with the new requirements.
Recommendations for compliance:
- Review accounting documentation and ensure it complies with regulations.
- Coordinate with your resident agent for the correct submission of registrations.
- Consult with corporate and tax law experts to avoid penalties.
Conclusion: The new provisions seek to strengthen the transparency and compliance of Panamanian companies internationally. If your company operates outside the country, it is essential to stay informed and comply with these regulations to avoid penalties.
At LAC Legal, we understand that these changes can generate doubts and uncertainty. Therefore, our team of experts personally supports each client, ensuring a swift and efficient adaptation process. Our commitment is to provide legal certainty and facilitate hassle-free regulatory compliance.
Need advice? At LAC Legal, we offer specialized guidance on regulatory compliance and accounting records. Contact us for more information.
Write to us at lac@lacgrp.com or visit www.lacgrp.com for more information.