On December 30, 2024, Executive Decree No. 177 of December 30, 2024 (hereinafter the “Regulations”) was enacted, which regulates the law that establishes the obligation to maintain accounting records for certain legal entities (hereinafter the “Law”).
Exceptions: Legal Persons Exempt from Compliance with the Law:
- Legal entities that are tax taxpayers in the Republic of Panama.
- Those that are listed on a local or international stock exchange.
- Those that are owned by an international, multilateral or State organization.
- Those of shipowners or charterers of ships registered under the international service of the Merchant Marine of the Republic of Panama.
Classification of Legal Persons:
The Regulation classifies legal persons into three categories and sets out their respective obligations:
1. Panamanian Legal Entity
- Definition: Legal entities dedicated exclusively to being holders of assets inside and/or outside the Republic of Panama, whose final beneficiaries declared to the Superintendence of Non-Financial Subjects are exclusively Panamanian citizens.
- Obligations:
- Deliver annually to its resident agent an affidavit, signed by a director, member of the Foundation Council or final beneficiary, certifying that:
- The legal entity is exclusively dedicated to being a holder of assets inside and/or outside the Republic of Panama.
- It does not carry out operations or activities that generate taxable income in the Republic of Panama.
- If they generate income outside the Republic of Panama, they must submit annually at least one of the following documents:
- Financial statement.
- Summary of the elements of its financial situation (model incorporated at the end of this document), signed by a director, member of the Foundation Council or final beneficiary.
- Deliver annually to its resident agent an affidavit, signed by a director, member of the Foundation Council or final beneficiary, certifying that:
2. Foreign Legal Entity
- Definition: Legal entities dedicated to being holders of assets inside and/or outside the Republic of Panama, and/or that generate income, whose final beneficiaries declared to the Superintendence of Non-Financial Subjects are at least one foreigner.
- Obligations:
- Submit annually to your resident agent at least one of the following documents:
- Financial statement.
- Summary of the elements of its financial situation (model incorporated at the end of this document), signed by a director, member of the Foundation Council or final beneficiary.
- Submit annually to your resident agent at least one of the following documents:
3. Legal Entity Without Operations
- Definition: Legal entities that do not carry out commercial activities, nor generate income inside or outside the Republic of Panama, nor do they have assets inside or outside the Republic of Panama, regardless of whether the final beneficiary declared to the Superintendence of Non-Financial Subjects is Panamanian or foreign.
- Obligations:
- Deliver annually to its resident agent, a certification or affidavit, signed by a director, member of the Foundation Council or final beneficiary, containing the following, namely:
- That it has not carried out, nor does it carry out commercial activities or carry out any type of operations.
- That it has no income and does not carry out income-generating activities inside and/or outside the Republic of Panama.
- That it has no assets inside and/or outside the Republic of Panama.
- Deliver annually to its resident agent, a certification or affidavit, signed by a director, member of the Foundation Council or final beneficiary, containing the following, namely:
Resident Agent Obligations
- Annual report to the General Directorate of Revenue (DGI):
- The resident agent must submit an affidavit to the DGI before June 15 of each year, including:
- A list of the legal entities for which the information established in the Regulation is available, including the RUC number of each of them.
- The resident agent must submit an affidavit to the DGI before June 15 of each year, including:
Sanctions:
The competent authority may apply sanctions to legal persons that do not comply with the obligations set out in the Regulation. Filing the return exempts the resident agent from custody of accounting records and supporting documents.
Failure to submit the affidavit by the resident agent will be subject to the sanctions established in the Law, among which the following stand out:
- Fine ranging from five thousand dollars (US$ 5,000.00) to one million dollars (US$ 1,000,000.00), applicable by the General Directorate of Revenue, considering the seriousness of the offense, the recidivism and the magnitude of the damage.
- Suspension of corporate rights, in the Public Registry of Panama, of legal entities that do not comply with the delivery of the required information in accordance with the provisions of the Law and the Regulations.
- The General Directorate of Revenue is empowered to order the Public Registry to liquidate the legal entity administratively, provided that it has been suspended in the Public Registry for non-compliance with the obligations established for legal persons under the Panamanian legal system and has not been reactivated within a period of 1 year. counted from the registration of the suspension in the Public Registry of Panama.
Do not hesitate to contact us if you have any questions.
Denise Littman
Director of the Corporate Department
Yuri Moreno
Partner
The information provided by ARIAS® is presented for informational purposes only. This information is not legal advice and is not intended to create, nor does it constitute, an attorney-client relationship. Readers should not act on this information without seeking advice from professionals in the field.
