PANAMA Law and Practice Contributed by: Anna Cristina Valdés, Edgar Herrera, José Manuel Motta and Ramón Arias, Galindo, Arias & López
• Administrative tax evasion applies when the amount evaded is less than USD300,000 per year, excluding fines, surcharges and interest. In such cases, the matter is handled administratively by the Panamanian Tax Authority. If the non-payment occurs without concealment or the intentional use of fraudulent means, the sanction will consist of a fine ranging from 25% to 50% of the taxes owed. • Criminal tax evasion (fraudulent tax evasion) applies when the amount evaded is equal to or exceeds USD300,000. Such cases fall under the jurisdiction of the Public Prosecutor’s Office and constitute the criminal offence of fraudulent tax evasion. It is important to note that in cases of criminal tax evasion, both individuals involved and the legal entity itself may face sanctions, including prison sentences. These criminal proceedings also carry extrajudicial consequences, which have been applied to fiscal periods starting in 2019, adding further implications for taxpayers found guilty of this offence. 6.3 Interaction Between Tax and Criminal Procedures The Panamanian Tax Authority is responsible for iden - tifying potential tax evasion or fraud. If the amount involved meets the threshold for criminal tax evasion (see 6.2 Criminal Penalties ), the Tax Authority must automatically refer the case to the Public Prosecutor’s Office. Once referred, the Public Prosecutor reviews the evidence and may open a criminal investigation for fraudulent tax evasion. 7. Administrative Co-Operation 7.1 Legal Framework for Administrative Co- Operation The following legal instruments that form the basis of administrative co-operation in tax matters in the Republic of Panama: • double tax conventions with mutual agreement procedures and information exchange provisions; • tax information exchange agreements duly execut - ed by the Republic of Panama;
• the OECD Multilateral Instrument and other OECD standards; and • domestic legislation that implements these interna - tional commitments. 7.2 Exchange of Information Clauses in Tax Agreements The Republic of Panama exchanges information as follows: • automatically – the country has implemented the Common Reporting Standard of the OECD; • upon request, as per double tax treaties and tax information exchange agreements; and • spontaneously, if it identifies matters or interest in another jurisdiction, based on the legal framework provided by its tax treaties and domestic legisla - tion. 7.3 Other Forms of International Tax Collaboration Panama participates in multilateral arrangements mainly through the mutual agreement procedure and information exchange under existing treaties for the avoidance of double taxation, and the tax information exchange agreements. Panama does not currently participate in the Inter - national Compliance Assurance Programme, nor in any initiative that co-ordinates joint or simultaneous tax audits. 8. Mutual Agreement Procedures and Arbitration 8.1 Availability and Legal Basis Panama’s double tax treaties include provisions for Mutual Agreement Procedures (MAPs), allowing tax - payers to resolve issues of double taxation or treaty interpretation with the competent authorities of the treaty partners. However, Panama has not established a formal, standalone MAP programme. MAPs are han - dled on a case-by-case basis through the competent authority mechanism provided in each treaty.
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