Law No. 52 of October 27, 2016, enacted by the Panamanian government, introduced significant changes for legal entities in Panama, effective from January 1, 2017. The law primarily focuses on accounting record obligations and related requirements for offshore companies and other legal entities. Key aspects of this law include:

Accounting Requirements

1. Mandatory Accounting: All entities regulated by Panamanian law, including companies and foundations, are required to maintain accounting records.
2. Minimum Records: The accounting should consist of at least a general ledger and a journal.
3. Record Keeping: Accounting records and supporting documents must be kept for a minimum of five years.
4. Location of Records: Records can be kept outside Panama, but must be provided to the Registered Agent within 15 days if requested.

Supporting Documentation

• Supporting documents include contracts, invoices, receipts, and any other evidence of transactions conducted by the legal entity.

Registered Agent Responsibilities

• The Registered Agent must be informed of the physical address where records are kept and the contact details of the custodian.
• Any changes to the custodian or physical address must be reported to the Registered Agent.

Penalties for Non-Compliance

• Failure to comply with the law can result in penalties, including the suspension of corporate rights.
• A restoration penalty of $1,000 applies for entities seeking to restore their status after suspension.

Annual Franchise Tax

The law also addresses the annual franchise tax for legal entities:

• Late payment incurs a surcharge of $50 per year or portion thereof.
• Failure to pay can result in the non-recording of corporate acts and restrictions on obtaining certifications from the Public Registry.

This law aims to enhance transparency and accountability for offshore companies and other legal entities operating under Panamanian law, aligning with international standards for financial reporting and record-keeping.