Information on the development of the system of automatic exchange of information in Panama

The Republic of Panama complies with the international requirements of tax transparency and once again proved it on October 20, approving the law that makes up the regulatory framework for the introduction of tax information exchange.

In addition, the state signed the OECD Convention on October 27, with a view to ensuring transparency and counteracting tax evasion in Panama.

The Law No. 52

About Accounting

The Legislative Council of Panama approved a bill that affirms mandatory accounting for legal entities. The law concerns directly those persons whose activities are not registered and have no legal force in that state.

The law states that accounting records with accompanying documentation should be stored within 5 years (minimum period). The storage location is determined by the Company's Management Board. If this place is not the office of a local representative of the company, this representative shall be sent the following information in writing:

• actual address for storing accounting statements and related documentation;
• the name and contact details of the person maintaining records and responsible storing of reports.

If the actual address or contact details of the responsible employee change for any reason, it is necessary to notify the local representative about the foregoing within 15 working days.

With regard to the penalty provided for in the event of non-compliance with accounting obligations, it will be $1,000 and $100 extra for each day of delay.

On termination of corporate legal relations of a legal entity and its liquidation

According to the Law №52, Single State Register of Legal Persons is entitled to terminate corporate legal relations of the company in the following cases:

• absence of designated local representative within 90 days after the dismissal from office, discharge from office or termination of contract with the previous one representative;
• absence of annual license payments for 3 years;
• non-payment of fine, fee or penalty imposed according to the order of the appropriate authorized body.

After the registration of termination of legal relations, the 2-year liquidation period comes into effect. If, upon the expiry of this period, the legal entity does not resume its activities, the Single State Register initiates the liquidation procedure.

On Bearer Shares Ownership

By the time the Law No. 52 comes into force, holders of bearer shares are required to provide relevant certificates.