Compliance with Financial Regulations in Panama: What You Need to Know
Panama has become a popular business destination due to its favorable tax and financial laws, but it’s essential for companies to comply with international regulations. Here’s what you need to know about the recent regulatory changes:
Registration of Beneficial Owners
One key change is the registration of beneficial owners, introduced through Law No. 129 in March 2020. This law requires all registered companies to report on their shareholders and beneficial owners via their resident agents.
Who are considered beneficial owners?
- Natural persons who own or control directly or indirectly 25% or more of the shares or voting rights of a company.
- Individuals responsible for managing a business entity.
Compliance Deadlines
The deadline to report varies depending on the status of the entity:
- For new entities, 30 business days from incorporation
- For existing entities, 30 business days from any modification in reported information
Penalties for non-compliance
Entities that fail to comply with this obligation may face penalties, including:
- Suspension of corporate rights
- Non-registration of documents in the Public Registry
- Monetary fines
Due Diligence for Resident Agents
Law No. 254 enacted in November 2021 introduced extensive due diligence registers for resident agents. This requires them to verify the activities of their clients and monitor them using relevant mechanisms.
Accounting records
The law also establishes the obligation to keep accounting records for all entities that do not operate in Panama or hold assets inside or outside the country. These records must be kept for a minimum period of five years, either at the offices of the resident agent or anywhere in the national territory.
Importance of Compliance
Establishing and operating a business while ensuring compliance with regulations and reporting obligations is a significant challenge for companies. The increasing complexity of regulatory compliance can make it difficult for businesses to grow or even establish themselves in Panama.
Seeking professional help
To navigate these complex regulations, it’s essential to seek the expertise of professionals who are familiar with local laws and international standards. TMF Group Panama offers local knowledge and support to help businesses identify opportunities and address challenges related to tax and financial transparency. Make an inquiry today to learn more about how we can assist you.