Panama adopts the Transfer Pricing Report Country by Country. Expiration on December 31, 2019 with respect to fiscal year 2018

By Executive Decree No. 46 dated May 27, 2019, published in the Official Gazette on the same day, the Regulatory framework of the Country-by-Country Report (hereinafter RPxP) was approved. Next, the explanation of the main aspects of this decree.

1. Background

1.1. Law 33 in 2010: Introduces Transfer Prices and requires the Declaration of Form 930 and the Study of Transfer Prices as of fiscal year 2011.

1.2. Since October 31, 2016, Panama has approved being part of the Inclusive Framework for the implementation of the recommendations provided by the G20 countries and the OECD in their adoption of the 15 actions of the BEPS Plan (Base Erosion and Profit Shifting).

1.3. Within the package of 15 actions, there is Action 13 called “Guide on the new Transfer Pricing Documentation standard and the Country by Country Report”, for which Panama is committed to implementing it.

1.4. Through Law 5 of February 21, 2017, the “Convention on Mutual Administrative Assistance in Tax Matters” was approved, which recognizes that international cooperation between States for the exchange of information on tax matters.

1.5. On January 24, 2019, the General Directorate of Revenue signs the “Multilateral Agreement between Competent Authorities for the Exchange of the Country-by-Country Report” so that RPxPs are exchanged automatically, complying with international standards of data protection and confidentiality.

2. Main aspects of the Country by Country Report obligation in Panama.

2.1. Obliged to present the RPxP: “All Ultimate Headquarters of a Multinational Group that has consolidated income of more than € 750,000,000 euros.”

2.2. Notification in the event of an entity that is a member of a Multinational Group. If an entity that has the quality of taxpayer in Panama and is a member of a Multinational Group that has its Headquarters outside Panamanian territory, it must inform the General Directorate of Income (hereinafter DGI) the identity and residence of the Reporting Entity .

2.3. The content of the RPxP regarding a Multinational Group must be the following:

2.3.1. The following information must be completed on all the entities that make up the Multinational Group:

•     Income

• Earnings or losses before taxes

• Income tax paid and accrued

• Declared capital

•     Retained earnings

•     Number of employees

• Tangible assets other than cash or cash equivalents

2.3.2. Information on the jurisdiction of tax residence of each entity and information on the nature of the activity or main activities of the business of said entity.

2.3.3. Any additional information or explanation that it deems necessary to include in the RPxP for its understanding by the DGI.

2.4. Form of presentation: The RPxP must be presented annually within the 12 months following the closing date of the corresponding fiscal period. It must be presented in “XML Schema” format in accordance with the regulations and guides defined by the DGI. It is worth mentioning that the XML format is a programming language and is the standard with which different countries worldwide are requesting the RPxP.

  • Ejemplos prácticos.

La lógica del RPxP es que sea presentado por las matrices de los Grupos Multinacionales a las Administraciones Tributarias de sus respectivos países, a fin de luego que estas Administraciones Tributarias intercambien la información en forma automática, en la medida que hayan firmado los acuerdos internacionales respecticos (Son dos acuerdos: 1) Acuerdo Multilateral entre Autoridades competentes para el intercambio de Informes País por País y la 2) Convención sobre Asistencia Administrativa Mutua en Materia Fiscal). En caso la matriz de un país determinado no haya firmado estos acuerdos o no haga efectivo el respectivo intercambio de información (incumplimiento sistemático), las Administraciones Tributarias de los países donde operan las entidades vinculadas al Grupo Multinacional podrían requerir los respectivos RPxP. Veamos los siguientes ejemplos (vamos a asumir que en todos los casos los grupos tienen ingresos consolidados que superan los €750,000,000 al año):

3.1. Panamanian Multinational Group.

X is an aviation entity whose headquarters are Panama: You have to file the RPxP with the DGI.

3.2. Latin American Multinational Group with legal headquarters in Panama.

And it is a group of entities originally from Argentina but who decided to constitute the Holding of the entire group in Panama. You have to present the RPxP to the DGI.

3.3. Multinational Group of the USA (country that has regulations on RPxP but has not signed either the “Multilateral Agreement between Competent Authorities for the exchange of Country by Country Report”, nor the “Convention on Mutual Administrative Assistance in Tax Matters”) that has a related company in Panama.


Z is a group that has its headquarters in the USA and has a Z Panama entity. As the USA has not signed the aforementioned international agreements, in principle Z Panama should present the RPxP to the DGI. This assumption should be clarified in later regulations.

3.4. Multinational Group with Headquarters in Central or South America that has a related company in Panama.

Q is a group that has its headquarters in a Central or South American country that does not have RPxP standards and has a related entity in Panama called “Q Panama”. In principle, Q Panama must present the RPxP to the DGI. This assumption should be clarified in later regulations.

3.5. Panamanian company that is part of a Multinational Group whose Headquarters has signed the respective international agreements.

W is a Multinational Group whose Head Office is in France and has a related entity “W France”. Given that France has signed the international agreements and complies with them, “W Panama” will only inform the DGI that the parent company in France will present the RPxP to the French Tax Administration (it is understood that the DGI will access this RPxP due to the automatic exchange of information). This assumption should be clarified in later regulations.

4. Sanctions. Failure to submit the RPxP will have the following sanctions:

4.1. In the case of the first time, it will be sanctioned with a fine of one thousand Balboas to five thousand Balboas and with the closure of the establishment for two days.

4.2. In case of recidivism, it will be sanctioned with a fine of five thousand Balboas to ten thousand Balboas and the closure of the establishment for up to ten days.

4.3. In case of persistence of the non-presentation of the RPxP, it will be sanctioned with the closure of the establishment for fifteen days.

5. Recommendations:

5.1. Due to the complexity of the detail of information that must be included in the new RPxP, it is recommended to work in advance on the information to be declared not only of the entity or entities domiciled in Panama but also of the total of entities that belong to the Multinational Group around the world. .

5.2. It is necessary that the person assigned by the Company for the Declaration of the Country-by-Country Report gets in touch with the professionals who are advising them on the issue of Transfer Pricing, in order to review the specific impact of the regulations discussed in their organization and in the Multinational Group to which they belong.

We are at your disposal to discuss and expand any query you may have in mind related to this issue.

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