As a result of the legislation approved in November 2021 (Law 254 of November 11, 2021), the issue of accounting records of companies in Panama was modified or rather deepened, which had already been stipulated in 2016 through Law 52, which established the requirement that legal entities, including corporations, limited liability companies or private interest foundations, were obliged to keep accounting records and maintain supporting documentation for a minimum term of five years.
Law 254 of 2021 delves into more specific aspects of these accounting records, indicating among other things:
Law 254 of 2021 establishes the obligation that the accounting records in Panama of legal entities that do not carry out operations that are perfected, consummated or have their effects within the Republic of Panama, as well as those that are engaged exclusively in holding assets outside or within the Panamanian territory, must be provided by the management bodies of the company to the resident agent for their due custody. The Law establishes a period of four months for the Resident Agent to have such information once the fiscal year has expired, establishing April 30 of each year as the deadline. Every year the resident agent must submit a sworn statement to the National Revenue Directorate (DGI), until July 15, containing the list of the legal entities for which they perform the resident agent service, including the name and RUC of the taxpayer. The information to be included in the Affidavit is divided or separated according to whether the accounting records and supporting documentation of the corporation are kept at the offices of the Resident Agent in the Republic of Panama or whether they are kept at any place other than the offices of the resident agent, inside or outside Panama, and that it has copies of the accounting records and the information of the person responsible for such records. In the event that there is a represented company of which neither the copies nor the information of the person responsible for the records are available, the resident agent will be subject to sanctions.
This fact does not change rather it is further detailed that if the accounting records are kept outside Panama, outside the offices of the resident agent, the legal entity is obliged to inform, annually and in writing, to the resident agent the name and contact details of the person responsible for the original accounting records, as well as the supporting documentation kept in its custody. It is very important to establish the physical address where these records are located.
Law 254 of 2021 establishes that the accounting records are those that clearly and precisely indicate the operations of the legal entity, its assets, liabilities and equity, as well as serve to determine the financial situation with reasonable accuracy at all times and allow the preparation of financial statements.
It is interpreted that the accounting records should be provided in the following form:
** In the case of legal entities that do not carry out commercial acts according to Article 2 of the Panamanian Commercial Code and that are exclusively engaged in holding assets of any kind, they must provide documentation that demonstrates the value of the assets held, the income received from the assets and the liabilities related to those assets.
** In the case of legal entities that carry out acts of commerce as defined in Article 2 of the Panamanian Commercial Code outside the Republic of Panama.
In accordance with the provisions of the Law, the following are exempted from the obligation to provide the resident agent with the accounting records or a copy thereof on an annual basis:
**Legal entities that are listed on a recognized local or international stock exchange.
** Legal entities owned by an international or multilateral organization or by a State.
** The owners or charterers of vessels registered exclusively under the international service of the Merchant Marine of the Republic of Panama.
For more information please contact us.
