Advanced Guide: Tax Obligations for Companies in Panama

The tax obligations in Panama are the set of regulations and fiscal duties that companies must comply with according to the country's legislation. These responsibilities not only ensure the correct contribution to the tax system, but also prevent sanctions and legal problems. Some of the main obligations include:

• Tax Affidavit (such as Renta and ITBMS).
• The payment of taxes and submission of forms within the established deadlines.
• Issuance of appropriate tax invoices and accounting records.

Failure to comply with these regulations can result in fines and penalties that significantly affect your company's operations.

In Panama, deductible expenses or costs are those that are directly related to your company's operations and are considered necessary to generate income. Some common examples of deductible expenses include:

• Wages and labor benefits.
• Payment for basic services such as electricity and internet.
• Acquisition and maintenance costs of assets used in the company.
• Interest on business-related loans.

Remember that deductions do not apply to personal expenses or expenses that are not justifiable with valid tax documents. To have a authorized public accountant can help you maximize tax benefits while complying with the law.

Who must file the Affidavit of Income?

All taxpayers, including legal entities such as companies, are required to submit their Affidavit of Income annual if they generate taxable income. This includes:

• Companies with active Trading Notices.
• Natural persons who carry out commercial or professional activities.

When should it be submitted?

The declaration must be submitted before March 31 of each year, although some companies may opt for justified extensions. Delays can result in significant fines.

What is the Amending Statement?

If you find errors in your original return, you can file what is known as a Amending statement. This is an official adjustment that allows errors to be corrected without incurring additional sanctions, as long as it is done before being audited.

El Movable Property Transfer and Service Provision Tax (ITBMS) applies to most business activities in Panama. This tax, equivalent to VAT in other countries, requires companies to:

• File a monthly return, detailing taxable income and the ITBMS collected.
• Make the corresponding payment within the stipulated time.
• Issue tax invoices that include information from the ITBMS.

It is important to keep a detailed and correct record of transactions to avoid inconsistencies that could lead to audits or sanctions.

Failure to meet your tax responsibilities can lead to tax sanctions in Panama, which can be:

• Financial penalties for late declarations or payments
• Cumulative interest on unpaid taxes.
• Suspension of operating licenses or permits.

In addition, your company's tax history may affect your ability to obtain funding or participate in government projects. Therefore, having expert advice is key to avoiding problems.