Recently, through Executive Decree No. 177 dated December 30, 2024, some of the previous rules for maintaining accounting records have been changed and simplified, making compliance more feasible.


Introduction:

Since 2016, it has been mandatory for any legal entity in Panama that does not perform operations perfected, executed, or taking effect within the Republic of Panama to keep accounting records and supporting documentation. This obligation also applies to entities acting solely as asset holders in any country.

Latest Updates: Recent modifications to accounting record regulations were introduced through Executive Decree No. 177 on December 30, 2024. These changes simplify previous rules and make compliance more achievable.


Requirements According to Executive Decree No. 177 How These Records Should Be Kept:


Entities without operations or assets:

Entities with no operations must file an annual affidavit declaring their inactivity. This affidavit must be submitted annually to the resident agent to comply with this legal obligation.

Entities with Operations or Assets (outside Panama):

Entities that have operations or assets outside Panama must present a balance sheet that accurately reflects their financial position. The new executive decree provides an example of the form through which this summary of financial position must be submitted. This form is attached to this communication for your reference.


Additional Requirements from Panamanian Authorities:

It is mandatory to maintain internally by the client, supporting documentation that confirms the information presented in the balance sheet.

You must be prepared to provide support and additional details on your balance sheets and financial statements if requested by a Panamanian authority, in compliance with International Financial Reporting Standards (IFRS).

Mandatory information required by the Resident Agents:

Legal entities are also required to notify the resident agent in the event of any changes to the person who maintains the accounting records or supporting documentation in their custody.

Legal persons shall be obliged to inform the resident agent annually in writing of the name and contact details of the person who maintains the accounting records and supporting documentation in their custody and the physical address where they are kept.


Penalties:

Failure to comply with the obligations set forth in the Accounting Records Law and the new decree results in fines for legal entities ranging from US$5,000 to US$1,000,000 without prejudice to other sanctions such as suspension of corporate rights and forced liquidation of the legal entity.


Important Deadlines:

For Legal Entities: Legal entities must submit their accounting records for the previous fiscal year to their resident agent by April 30 each year. This includes records for the 2024 fiscal year and all future years, which are due by April 30, 2025.

For Resident Agents: The deadline for resident agents to submit a sworn statement about the accounting records for the 2021, 2022, and 2023 periods has been extended to March 31, 2025.

Starting from January 1, 2025, a new decree establishes June 15 as the yearly deadline for resident agents to file a declaration with the Directorate General of Revenue (DGI) about whether entities have met their obligations, irrespective of their operational status.


Attached for Reference:

Do not hesitate to contact us for any questions regarding the obligation to maintain accounting records and their submission to the resident agent to comply with the current regulations in Panama. We are ready to assist you and guide you through these obligations.