New regulatory provisions on accounting records in Panama
New regulatory provisions in Panama
Key Aspects of the Executive Decree
Classification of Legal Entities
The Decree classifies legal entities into three main categories:
1. Panamanian Legal Entities: Entities exclusively dedicated to holding assets within and/or outside of Panama, whose ultimate beneficial owners, as declared to the Superintendency of Non-Financial Entities (SSNF), are solely Panamanian citizens.
2. Foreign Legal Entities: Entities exclusively dedicated to holding assets within and/or outside of Panama and/or generating income, whose ultimate beneficial owners declared to the SSNF include at least one foreign citizen.
3. Panamanian Non-Operating Legal Entities: Entities that, regardless of whether their declared ultimate beneficial owner is Panamanian or foreign, do not carry out any commercial activity, do not generate income, and do not hold assets within and/or outside of Panama.
Obligations by Category
Panamanian Legal Entities:
These entities must annually provide their resident agent with a sworn statement signed by a member of the board of directors, the foundation council (as applicable), the ultimate beneficial owner, or a duly authorized representative of the latter certifying:
- That the entity is exclusively dedicated to holding assets within and/or outside of Panama.
- That the entity does not engage in operations or commercial activities generating taxable income in Panama.
Additionally, entities whose beneficial owners are solely Panamanian citizens and who generate taxable income outside Panama must also provide one of the following annually:
- Financial Statements; or
- A Financial Summary, signed by a member of the board of directors, the foundation council, the ultimate beneficial owner, or a duly authorized representative of the latter.
Foreign Legal Entities:
These entities must annually provide one of the following:
- Financial Statements; or
- A Financial Summary signed by a member of the board of directors, the foundation council, the ultimate beneficial owner, or a duly authorized representative of the latter.
Panamanian Non-Operating Legal Entities:
These entities must annually provide their resident agent with a sworn statement signed by a member of the board of directors, the foundation council (as applicable), the ultimate beneficial owner, or a duly authorized representative of the latter certifying:
- That they have not carried out and do not carry out any commercial activity or operation.
- That they have no income or engage in activities generating income within and/or outside of Panama.
- That they have no assets within and/or outside of Panama.
Obligations of the Resident Agent
The resident agent must file an annual sworn statement with the General Directorate of Revenue (DGI) by June 15, including the name and Unique Taxpayer Registration (RUC) number of the entities under their management.
Assistance with Regulatory Compliance
At Forvis Mazars, we are here to assist you with compliance with these new regulatory provisions regarding accounting records. If you have questions or require guidance, please do not hesitate to contact us.
