Accounting Records / Panama New Legislation.
From the moment you decide to start operating a company, it is necessary to be prepared for the fact that this implies certain requirements for transparent management in front of clients, employees, strategic partners, banks, and regulators.
Keeping accounting records in Panama
Keeping accounting records up to date is one of those tasks, which in these times becomes relevant because, in addition to providing a clear, accurate, and objective view of the financial situation of the company, this allows us to comply with accounting and tax obligations.
Panama´s Law 254
In Panama, Law 254 of November 11, 2021, defines accounting records as those documents that indicate the operations of legal entities, their assets, liabilities, and equity; that serve to determine the financial situation with reasonable accuracy at all times and make possible the preparation of financial statements.
Interesting facts about the new accounting registration law (maintain accounting records)
Law 254 of November 11, 2021, which was recently approved and sanctioned, introduces adjustments to Panamanian legislation on international tax transparency and prevention of money laundering, financing of terrorism, and proliferation of weapons of mass destruction, which includes, among other things, how and when Panamanian legal entities operating or not in the country must submit their accounting records and supporting documents.
In addition, it highlights important elements that resident agents must take into account when sharing with the competent authority the accounting documents of the legal entities for which they provide a service.
What you should know about accounting records in Panama
Failure to comply with this new regulation brings monetary sanctions between $5,000 and 1,000,000,000 million dollars for legal entities and also for resident agents.
But more than what this law establishes and the sanctions it would impose, which are extremely relevant aspects, it is important to highlight where this regulation puts us as a country.
Why did Panama have to adopt this legislation?
Unfortunately, our country is part of discriminatory lists and to remain in them brings consequences for investments and for the country’s image.
Therefore, the country has been strengthening its regulatory framework on international tax transparency to comply with established international standards and strengthen due access to financial information of legal entities, and beneficial owners and, consequently, improve the ratings of organizations such as the Organization for Economic Cooperation and Development (OECD) and the Financial Action Task Force (FATF).
This becomes a central element for authorities/regulators to protect our financial and tax system with clear objectives to prevent money laundering, facilitate tax collection, and provide transparency in the markets.
Formalization of legal entities
In the case of legal entities, the improvement of processes is promoted through the formalization of the maintenance of financial documents continuously and methodically.
The best way we see to comply with transparency is through the registration of all accounting transactions of the companies, which are summarized in the preparation of basic financial statements.
In the case of legal entities, the improvement of processes is promoted through the formalization of the maintenance of financial documents continuously and methodically.
We believe the best way to comply with transparency is through the registration of all accounting transactions of the companies, which are summarized in the preparation of basic financial statements.
This is a significant step forward in Panama’s efforts to comply with those transparency standards that could affect its performance as an international financial center, especially when it is potentially being identified as a promoter or permissive jurisdiction for money laundering or illegal capital trafficking.
If you are interested in reading more about us, access our blog.
We invite you to subscribe to our Youtube channel, where you can find videos on topics of interest in corporate and fiduciary matters, among others.
