1. PUBLISHED STANDARD:
On April 2, 2018, Resolution No. 201-1937 was published by the General Directorate of Revenues of the Ministry of Economy and Finance, in use of its legal powers. Said elements must be considered for the presentation of tax obligations regarding Transfer Pricing.
It is very important to take into account the deadline established for the presentation of the Transfer Pricing informative statement, which is within the first six (6) months following the closing date of the fiscal period. Failure to submit the report (Form 930) will be sanctioned with 1% of the total amount of transactions with related parties. That have an effect on (Income, Cost and Expenses).
The Transfer Pricing Report contains the information on the operations that the taxpayer has carried out, during a certain fiscal period, with related parties that are fiscal residents of other jurisdictions, in accordance with the provisions of Article 762-D of the Fiscal Code.
All amounts declared in the Transfer Pricing Report must be expressed in US dollars, the legal tender of the Republic of Panama, in accordance with the provisions of Law 84 of 1904. In the final part of the report, the Name of the Legal Representative and his identity card or passport number, who is responsible for the veracity of the detailed information.
Form No. 930, which contains the Transfer Pricing Report, must be submitted online through the E-Tax 2.0 System of the General Directorate of Revenue.
In accordance with Article 762-I of the Fiscal Code, this form must be submitted within six months of the closing date of the fiscal period.
The taxpayer who fails to comply with the obligation to present the Transfer Pricing Report within the established period will be sanctioned with a fine equivalent to 1% of the total amount of the transactions with related parties. In any case, the fine will not exceed one million balboas (B /. 1,000,000.00).
In order to comply with a strategic framework for the development of an efficient and global vision of international transactions and their fiscal impact, form 930 V 1.0 is modified through Resolution 201-1937 of Monday, April 2, 2018 issued by the Ministry of Economy and Finance through the General Directorate of Income. This new “Version 2.0” report will be used to report the information corresponding to fiscal 2018 and subsequent periods.
Among the most relevant changes in the new form, it is related to the information requested about comparable transactions selected by the taxpayer.
Another relevant change for taxpayers is that due to the detail of information that must be included on comparable transactions, in practice it will be mandatory to have a transfer pricing study or at least a draft, prior to submitting the form.
Form No. 930 V 2.0 ‘’ Transfer Pricing Report ’’ also includes an annex that must be completed by taxpayers who carry out intangible transactions, such as royalties, trademarks, ‘know-how 'or intellectual property.
In turn, the "Intangibles Annex" requests detailed information on the intangibles traded between the taxpayer with related parties for the fiscal period 2018. It is also requested to import (attach) a file created in Excel with text format (delimited by tabulations ) in Excel version.
With the new form, the taxpayer must complete a series of questions related to the organizational group to which they belong. Regarding the "Specific questions to the taxpayer", you are asked to answer a series of questions related to the tax regime where it is located, if it used comparability adjustments for the analyzed operations, if it was used comparable with operating losses, among others. Additionally, you are asked to answer questions about the business group to which you belong, so we are sure that they are part of the guidelines of the tax base protection project (BEPS Project) developed by the OECD and of which Panama is part of the countries committed to its admission.
The General Directorate of Revenue has posted an online instructions (E-tax 2.0) that serves as a guideline for taxpayers regarding the way in which the information should be loaded into the form. It should be noted that within these instructions highlights the fact that the DGI indicates that no rectifications of form No. 930 V 2.0 may be submitted, leaving only the possibility of requesting the cancellation of the wrong presentation (prior to the expiration of the delivery term) by means of a memorial addressed to the Director General of Revenue and it remains his authority to accept the cancellation or not of the form, which in case of being admitted will allow the taxpayer to present a new form before the expiration of the term. With the detail of the economic analysis of the taxpayer and the comparables chosen, the DGI will be able to have a fairly clear scenario of those taxpayers that are in breach of the arm's length principle.
It is very important to note that this new format of Form No. 930 V 2.0 is mandatory for taxpayers who have operations with related parties abroad and begins to govern according to the regulations for fiscal year 2018, so those companies whose closing The fiscal period was 2017 and who must submit the form for previous periods, they must continue using the previous format (Form 930 V1.0) as they had done in previous years.
§ Due to the complexity of the detail of information that must be included in the new “Form N ° 930 Version 2.0”, it is recommended to have the Transfer Pricing Study prior to submitting the Form as of June 2019 for General Regime taxpayers and to June 2020 for taxpayers with SEM License, because the Study is the support for the information that will be presented in this form.
§ Because after the presentation of the 930 V 2.0 report, no corrections can be presented, only having the possibility of requesting the cancellation of the wrong presentation; It is recommended to carry out a proactive work with its related companies in order to collect the necessary information for the presentation of the form and the preparation of the Transfer Pricing Study.