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2016.11.28 - Panama – Law 52 of 2016 – requirements for keeping of Accounting records.

 

In October 2016 Panama adopted the Law 52, which comes into force on 01.01.2017. In addition to other requirements, the law obliges all companies registered in Panama (including also those operating only outside Panama) to keep their accounting records as well as documents to support such records.

The key requirements of the Law 52 of 2016 in regard of the procedure of keeping of accounting records are as follows:

  1. Companies must keep accounting records and the supporting documentation for period not less than 5 years, beginning from the last date of the calendar year when the particular transaction was carried out. The supporting documentation includes contracts, invoices, financial records etc. - everything which is necessary to evidence the transactions conducted by the company.
  2. In the event that accounting records and supporting documentation are not kept at the registered office of the company, it is required to inform the resident agent in Panama about the physical address of the place where the accounting records and supporting documentation thereof are being kept, as well as the name and contact information of the person responsible for keeping of the records.
  3. Companies are obliged to inform their resident agents in writing in the case of change of the aforesaid address or the responsible person within a term of 15 business days from the date of such change.
  4. In the event that accounting records and supporting documentation are kept outside of the Republic of Panama, if requested a company’s resident agent must provide them within 15 business days from the date of such request.
  5. In the event that a company fails to comply with the obligation as per ‘4’ above, its resident agent shall be bound to resign and to record the aforesaid resignation in the Companies Register within a term of 10 business days from the expiration of the relevant term.
  6. In the event that the resident agent fails to fulfill the aforesaid requirement, he will be fined, and forced to resign from providing ‘registered agent services’ to this company.
  7. Requirements related to keeping accounting records and supporting documentation apply not only to standard Panamanian companies, but also to other types of entities in this country, including but not limited to Panama private foundations.

Other requirements laid down in the Law 52 of 2016:

  • – Pursuant to the Law 52, the resident agent must keep information on the shareholders of the companies he serves, including copies of documents confirming the ownership of their share capital.
  • – Companies failing to fulfil the requirements of the Law 52 may be held liable and receive a fine of up to 1000 USD, plus 100 USD per day until the failure has been rectified.
  • – The Law 52 lays down also the procedure for striking a legal entity off the Companies Register. Specifically if the legal entity fails to timely pay annual fees, the Register applies to it the status “delinquent”, which will not allow it to receive the Certificate of Good Standing or other documents from the Register. Furthermore, if the legal entity fails to pay annual fees within a period of three consecutive years (or does not have a resident agent during a period of over 90 days), the Register applies to it the status “suspended”. At this stage, the status may be restored to “active” by paying all outstanding fees as well as fine in the amount of 1000 USD. However, if the “active” status is not restored within 2 years after being in the status “suspended”, the legal entity will be irretrievably struck off the Companies Register.

Comments by INTERNATIONAL OVERSEAS SERVICES:

The laws prescribing to keep accounting records have been in effect for several years in jurisdictions like BVI (Mutual Legal Assistance/Tax Matters Act 2003), Seychelles (International Business Companies Amendment Act 2011), Belize (Accounting Records Maintenance Act 2013), as well as other classical tax-free territories.

By enacting the Law 52 of 2016, Panama follows the current world tendencies aiming to strengthen accounting and corporate standards.

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