Panama

In Panama, there are no group taxation rules.

Transfer pricing

Transfer pricing obligation is extended to all the transactions carried out with related parties located abroad or under a special tax regime in Panama. There is an obligation to file an annual Transfer Pricing Informative Return (‘Form 930’), which includes all the operations carried out with related parties during the fiscal year under analysis. This report should be filed six months after the fiscal year has ended. The non-submission of this Form will be penalised with a fine equivalent to 1% of the total sum of operations carried out with related parties and will never exceed USD 1 million.

Regarding transfer pricing documentation, the taxpayer must present the Local File and Master File, in case the Panamanian Tax Authority requires it, within 45 working days, starting a day after the notification. The tax authorities are allowed to fine those taxpayers that fail to present the transfer pricing documentation; fines ranging from 1,000 to 5,000 Panamanian balboas (PAB) will be applied the first time, from PAB 5,000 to PAB 10,000 in case of recurrence, and the closure of the establishment for 2 to 15 days in case of non-compliance.

Country-by-Country Report

Applicable to multinational groups with consolidated revenues exceeding EUR 750 million. If the ultimate parent entity is a tax resident in Panama, it must file the Country-by-Country (CbC) Report. Otherwise, the Panamanian entity must submit a notification identifying the reporting entity and its tax jurisdiction.

The notification must be submitted in the first year of obligation and updated only if any of the reported information changes. Failure to file the CbC Report may result in a fine of USD 100,000, plus an additional progressive penalty of USD 5,000 per day until compliance is achieved. Failure to submit the notification may result in fines ranging from USD 1,000 to USD 5,000, increasing with continued non-compliance.

Thin capitalisation

There are currently no thin capitalisation rules in Panama.

Controlled foreign companies (CFCs)

There are no provisions regarding CFCs in Panama.