Legal Services

Accounting Records obligations

Accounting Records obligations
for Panama Companies and Private Foundations.

Updated requirements as per law 254 of November 11, 2021.



Legal entities that do not carry out operations that are perfected or consumed or have their effects within the Republic of Panama, as well as those that are dedicated exclusively to being an asset holder, inside or outside Panamanian territory are obliged to keep accounting records and maintain their supporting documentation.

Accounting records and supporting documentation may be kept outside Panama, however, after one year of incorporation the legal entities shall be obliged to provide the Resident Agent (our law firm) annually, as of April 30 a copy of the accounting records relating to the fiscal period that ended on December 31 of the immediately preceding year.

The legal entities must report annually, in writing to the resident agent, the name, contact details of the person who maintains the accounting records and supporting documentation in their custody, and the physical address where they are kept.



New entities:
After one year of incorporation the legal entities shall be obliged to provide the Resident Agent (our law firm) annually, as of April 30 a copy of the accounting records relating to the fiscal period that ended on December 31 of the immediately preceding year.

Existing entities:
Entities (incorporated before the entry into force of the law Nov. 11, 2021) will have a period of six (6) months from its entry into force to deliver to the resident agent copies of their accounting records.



The accounting records shall be provided as follows:

1. In the case of legal persons which do not engage in acts of trade or business, and which are exclusively engaged in being holders of assets, they shall provide information demonstrating the value of the assets held, the income received from those assets and the liabilities relating to those assets.

2. In the case of legal persons engaged in acts of commerce/business, they shall provide an accounting journal and the general accounting ledger.

If there is a request from the competent authority, legal entities shall be obliged to provide any supporting documentation and additional information within the time required by the competent authority.


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Sanctions

We have the responsibility to inform of the following sanctions to which legal persons who do not comply with the obligations to send us a copy of the accounting records are exposed.

 The Panama General Directorate of Revenue (DGI) will sanction legal entities that fail to comply with the obligations established in this law with fines from five thousand USD ($5,000) to one million USD ($1,000,000). Additionally, the DGI will suspend the corporate rights of the entity until the infraction is corrected.



Additional information can be obtained on:
www.matapitti.com/blog/law-254-on-accounting-records

Please contact us for any questions about these obligations to keep accounting records about your company or foundation, we are available to assist you.