Through Law No. 254 of 2021, amendments were introduced to Law 52 of 2016 (Law 52), regarding the obligation, for all legal entities organized under Panama law, to maintain accounting records and supporting documentation.
Accounting records will be those that indicate, in a clear and precise manner, the operations of a legal entity, its assets, liabilities and patrimony, and enable to determine with reasonable certainty the entity’s financial situation, such that financial statements can be prepared.
I. Accounting Records Obligations for all entities organized under Panama law:
- Must be maintained in Panama or in any part of the world for a period of 5 years since the last transaction took place.
- The records, or a copy of such (as of December 31st of the previous year), must be sent to the Resident Agent, on an annual basis, by the 30th of April of each year.
- In cases where the records are kept in a place different from the Resident Agent’s offices, the entity must also confirm:
a. Name and contact details of the person who holds the records in custody (and notify in case of changing); and
b. Address where they are kept.
II. Exceptions:
The following legal entities are exempted of the obligation to provide their records to the Resident Agent:
- Entities listed in a local or internationally recognized stock exchange.
- State-owned entities; and
- Entities registered exclusively under the Merchant Marine of the Republic of Panama.
III. Types of Accounting Records that must be provided:
a) Entities that exclusively hold assets and have no commercial operations:
Documents that show:
- The value of the assets,
- The income generated by said assets, and
- The liabilities associated with said assets.
b) Entities that operate or perform commercial acts outside of Panama:
- A journal and a general ledger.
c) Entities that purchase and sell credit titles and public or private commercial securities to profit from their resale or by any other means of commercial speculation:
- Statement of account or general balance of the entity.
IV. Obligations for entities incorporated prior to the enactment of Law 254:
- Provide the Resident Agent, before April 2022, copies of the accounting records and supporting documentation to be held in their offices. Once this period is expired, the Resident Agent will prepare a sworn statement confirming this information.
- The Resident Agent will resign and register its resignation in the Public Registry immediately in the cases where companies do not provide accounting records or the relevant information regarding where these are kept.
V. Sanctions:
- Penalty to the entity between USD 5,000.00 and USD 1,000,000.00.
- Suspension of the corporate rights of the entity. To reactivate these, the procedure established in Panama’s Fiscal Code shall be followed.
