Panama: Accounting Records and supporting documentation

According to Law No. 52 of October 27, 2016, entities/legal entities that do not perform operations that are perfected, consummated or take effect within the Republic of Panama, as well as those entities/legal entities that are exclusively engaged in being asset holders, within or outside the Panamanian territory, are required by law to keep their accounting records and maintain their supporting documentation.

However, with the introduction of Law No. 254 of November 11, 2021, legal entities/entities are now required to also provide to their resident agent, for its custody, originals, or copies of their accounting records, no later than within four (4) months following the expiration of each fiscal year, i.e., no later than April 30 of each year. In other words, the accounting records as of December 31, 2021, must be delivered to us no later than April 30, 2022, and likewise at the expiration of the subsequent fiscal years.

However, legal entities incorporated before the entry into force of Law No. 254 of November 11, 2021, have been granted a deadline until October 31, 2022, to deliver to their resident agent the original or copies of the accounting records for the year 2021.

In order to comply with the legal requirements of the Panamanian jurisdiction, the legal entities for which we act as resident agents in Panama must provide us, on an annual basis, with the following:

1. Original or copy of their accounting records for the fiscal year ended December 31 of the previous year.
2. Address of the physical place where the original accounting records and supporting documentation of the legal entity are kept, as well as the name and contact information of its custodian, unless the original accounting records are kept at the offices of the resident agent in the Republic of Panama.

Important: In case of dissolution, the entities/legal entities must provide, copy or original of the accounting records, as well as the supporting documentation, related to the 5 years prior to the registration of the dissolution.

The following types of legal entities are exempted from annually providing their resident agent with originals or copies of their accounting records, which must provide their agent with the appropriate backup, namely:

1. Legal entities listed on a recognized national or international stock exchange.
2. Legal entities owned by an international or multilateral organization or a State.
3. Legal entities that are owners or charterers of vessels registered exclusively under the international service of the Merchant Marine of the Republic of Panama.
4. Legal entities that carry out commercial operations within the Republic of Panama.

Notwithstanding the foregoing, the referred entities must still keep and maintain accounting records and have them available in case of requirement of a competent authority.

If a legal entity does not comply with the requirements, its resident agent must report such fact to the authorities on an annual basis, and such non-compliance will result in penalties, which will be imposed on the entity.

If any of your legal entities with us have not yet complied with these requirements, or you are unsure whether you have complied, please contact us immediately at quijano@quijano.com.