Panamanian Tax Legislation and Its Impact on Businesses

Tax compliance is an essential part of operating a business in Panama. This article's original discussion of transparency and international standards has been revised to avoid describing unspecified tax rates or reforms as newly in force.

Areas businesses should review

International transactions and transfer pricing

Transactions between related parties, cross-border payments and the documentation supporting them require particular attention. Businesses should determine which reporting and transfer pricing obligations apply to their activities.

Tax calculations and supporting documents

Applicable rates, deductions, filing requirements and penalties must be checked against the relevant legislation and the circumstances of the taxpayer. This article does not announce a general change in tax rates or deductions.

Transparency and information exchange

International tax cooperation involves specific legal instruments and procedures. A double taxation treaty is distinct from an information exchange arrangement; the existence of either does not automatically grant a business tax benefits.

Practical effects on a business

• Maintaining consistent accounting records and supporting documents.
• Identifying obligations associated with international and related-party transactions.
• Allocating time and resources to reporting, internal review and professional advice.
• Responding to requests from the competent authorities within the applicable procedures.

Preparing the organisation

Training the accounting and finance teams, reviewing internal processes and obtaining advice suited to the business can help identify gaps before a filing or transaction. Corporate structures and financing arrangements should be assessed together with their legal and tax consequences.

For a review of your company's circumstances, explore our tax advisory services or contact BCCA.

Reference: General Directorate of Revenue: double taxation treaties.