Panama

Taxable period

The accounting period is the period for which the company makes its accounts. Returns shall be made upon completion of the accounting period and may not exceed 12 months. For most companies, it is usually from 1 January to 31 December.

Tax returns

The due date for filing is three months after the end of the fiscal year, with the possibility for an extension of up to one additional month.

Payment of tax

Income tax payment shall be made depending on the income tax return and shall be made no longer than three months after closing of the corresponding accounting period.

Taxpayers must pay estimated taxes (usually the same amount as generated income) at the end of the sixth, ninth, and 12th month after the end of the corresponding accounting period.

Tax audit process

Tax authorities select the taxpayers subject to audit based on internal criterion.

Statute of limitations

The general Statute of limitations is as follows:

1. After five years, direct and indirect taxes:
   a. The power of the Tax Administration to demand payment of tax debts which have been settled, self-assessed or by final resolution, and of the penalties imposed, counted from the day following the day on which the voluntary payment period ends.
   b. The power of the Tax Administration to determine the obligation and payment of taxpayers or delinquent taxpayers with their surcharges and interest, counted from the day following the date on which the regulatory period for filing the corresponding declaration ends.
   c. The power of the Tax Administration to impose tax sanctions, counted from the date on which the punishable infraction was committed, including administrative tax evasion, from the date on which the punishable infraction was committed.
   d. Among others.
2. After three years:
   a. The power of the Tax Administration to determine the additional obligation and the additional payment of taxpayers or inaccurate taxpayers with their surcharges and interest, counted from the day after the self-assessment or voluntary determination was submitted through sworn statements or tax returns-settlement.
   b. The power of the Tax Administration to impose tax sanctions, counted from the date on which the punishable infraction was committed, including administrative tax evasion through additional determinations.
3. After five years: the right to the refund of undue payments, over payments, or balances in favor of taxpayers, counted from the day after the undue payment, overpayment, or balance in favor was established.
4. After eighteen months: the right to request and submit the rectification of self-assessments or voluntary determinations through tax returns, counted from the day following the expiration of the deadline for submitting the self-assessment or voluntary determination.

Topics of focus for tax authorities

Among the topics of focus are non-deductible expenses, withholdings, and VAT.