Panama has introduced Country-by-Country Reporting (CbCR) regulations in line with the OECD BEPS Action 13 framework. The Panamanian Tax Authority (Dirección General de Ingresos – DGI) is responsible for overseeing CbCR compliance. These regulations aim to increase transparency in international taxation, particularly for multinational enterprises (MNEs), and ensure Panama’s adherence to international standards of tax information exchange.

This guide provides CFOs and tax professionals with a structured overview of Panama’s CbCR framework, including the applicability of the regulations, reporting obligations, submission process, penalties, and other essential resources.

Applicability of CbCR in Panama

Criteria for Reporting

CbCR regulations apply to multinational enterprise (MNE) groups that meet the following criteria:

• Consolidated global revenue of at least USD 750 million (approximately B/. 750 million) in the preceding financial year.
• The MNE must have at least one entity in Panama.

Local Filing Requirements

A Panamanian entity must file a CbC report if:

• It is the Ultimate Parent Entity (UPE) of the MNE group.
• It has been designated as the Surrogate Parent Entity (SPE) for CbCR purposes.
• The UPE is in a jurisdiction that does not require CbCR or does not have a qualifying exchange agreement with Panama.

Relevant Legislation

• Law No. 52 of 2016 – Establishes Panama’s tax transparency framework and includes the implementation of CbCR.
• OECD BEPS Action 13 – Forms the basis for Panama’s CbCR regulations.

Reporting Requirements

Content of the CbC Report

The CbC report must include jurisdictional financial data for each country in which the MNE operates, including:

• Total revenues (from related and unrelated party transactions).
• Profit or loss before income tax.
• Income tax paid and accrued.
• Stated capital and retained earnings.
• Number of employees.
• Tangible assets other than cash or cash equivalents.

Notification Requirement

• All Panamanian entities within an MNE group must notify the DGI about which entity will file the CbC report and in which jurisdiction.
• The notification must be submitted electronically before the end of the financial year.

Submission Platform

• CbC reports must be electronically filed through the DGI Online Portal, using the OECD CbCR XML schema.

Resource

Filing instructions and guidelines are available on the Dirección General de Ingresos (DGI) official website: www.dgi.gob.pa

Filing Deadlines

• CbC Reports: Must be filed within 12 months after the end of the financial year.
  • Example: For a financial year ending 31 December 2023, the report must be submitted by 31 December 2024.
• Notifications: Must be submitted before the end of the financial year.

Penalties for Non-Compliance

Penalties and Consequences

Failure to comply with Panama’s CbCR requirements can result in:

• Fines of up to B/. 100,000 for non-submission, late submission, or inaccurate reporting.
• Additional penalties for persistent non-compliance.
• Increased scrutiny by the DGI, potentially leading to tax audits.

Mitigation Measures

• Companies can request extensions or appeal penalties if they can demonstrate reasonable cause for non-compliance.

Confidentiality and Data Exchange

Data Protection

• The DGI ensures that CbC reports are confidential and used solely for tax risk assessment purposes.
• CbC reports are automatically exchanged with jurisdictions that have a bilateral exchange agreement with Panama.