PANAMA Law and Practice Contributed by: Anna Cristina Valdés, Edgar Herrera, José Manuel Motta and Ramón Arias, Galindo, Arias & López
5.4 Reporting Obligations and Disclosure Regimes The Panamanian Tax Procedure Code establishes broad compliance, reporting and disclosure obliga - tions aimed at preventing tax evasion and avoidance. Such regulation sets forth statutory obligations for taxpayers and other obligated persons, including: • registering and keeping information up to date in the tax registries; • filing sworn returns, self-assessments and related submissions; • maintaining accounting books and tax records; • supporting transfers of goods and the provision of services with legally issued vouchers, invoices or receipts; and • providing information generally required under tax rules or specifically requested by the tax authority, together with a general duty to co-operate with the tax authority. Furthermore, such regulation imposes an express obligation on third parties to provide relevant tax information derived from their economic, professional or financial relationships with taxpayers, subject to professional secrecy and other legal privileges. The Code also authorises the tax authority to conduct on- site verifications in establishments open to the public, requiring express authorisation, and establishes that audit reports (minutes) retain validity and probative value even if the taxpayer or its representatives refuse to sign or receive a copy. 5.5 Role of Tax Authorities and Enforcement Measures Pursuant to provisions set forth in the Panamanian Tax Procedure Code, the Panamanian Tax Authority has extensive powers to audit and verify compliance. Such regulation authorises the tax authority to require taxpayers to present, at their domicile or business premises, accounting books, records and supporting documents related to taxable transactions, including electronic records. It also allows audits at the premis - es of taxpayers and relevant third parties, asset inven - tories and reviews of accounting systems. These pow - ers may be exercised jointly or successively, and the
tax authority may request assistance from other com - petent authorities. In cases of repeated obstruction or impediment, the authority may conduct searches and seize goods and documents, as legally permitted. It is worth noting that, under such regulation, on-site inspections in establishments that are open to the public require express authorisation for officers, and all findings must be recorded in formal minutes. The validity and probative value of these audit reports are not affected if the taxpayer or representatives refuse to sign or receive a copy. In the Republic of Panama, the Panamanian Tax Authority is responsible for imposing fines and sanc - tions, issuing tax assessments, and enforcing compli - ance. It also oversees the application of double tax treaties, transfer pricing matters, the issuance of tax residence certificates, and the determination of per - manent establishments. The legal framework governing penalties related to cross-border transactions is primarily: • the Panamanian Tax Code (Law 8 of 1956, as 6. Penalties and Sanctions 6.1 Tax Penalties amended), which establishes substantive tax obli - gations, including penalties for non-compliance; and • the Panamanian Tax Procedure Code (Law 76 of 2019), which sets out procedural rules for tax assessments, collection, appeals and enforcement. Together, these laws authorise the Panamanian Tax Authority to assess and enforce penalties in the con - text of cross-border operations, ensuring compliance with both domestic tax rules and Panama’s interna - tional obligations. 6.2 Criminal Penalties Tax evasion in Panama is understood as any act or conduct carried out by a taxpayer with intentional fraud (dolus) to avoid paying or to reduce taxes in violation of the law. According to Panamanian law, tax evasion can take two forms.
341 CHAMBERS.COM
Powered by FlippingBook