Arosemena Noriega & Contreras

Category: Taxation

  • Mandatory Update of the Taxpayer Registration Number (RUC) in Panama – What You Need to Know

    Mandatory Update of the Taxpayer Registration Number (RUC) in Panama – What You Need to Know

    MANDATORY UPDATE OF THE TAXPAYER REGISTRATION NUMBER (RUC)

    Dear Clients,

    Please be advised that the Panamanian Tax Authority (Dirección General de Ingresos – DGI) has recently implemented the application of the sanction identified as “318 – Tax Penalty” in the amount of USD 500.00 with respect to corporations that did not formally complete the Taxpayer Registry (Registro Único de Contribuyentes – RUC) update procedure, a filing that must be carried out before the corresponding tax authority.

    In this regard, our Firm has made the necessary updates. If any of your entities have been affected by the above, please contact us as soon as possible at +507 366-8400 or by email at anc-notificaciones@anorco.com.pa.

    We appreciate your maintaining the confidentiality of this communication. Our purpose is to bring this information to your attention in a timely manner to facilitate the adoption of the appropriate measures.

    We remain at your disposal to provide any legal support you may require.

  • Global Minimum Tax and International Tax Framework Evolution

    Global Minimum Tax and International Tax Framework Evolution

    Global Minimum Tax and International Tax Framework Evolution

    The global minimum tax is an initiative led by the Organization for Economic Co-operation and Development and the Group of Twenty that was designed to address the allocation of taxing rights and the erosion of national corporate tax bases. The first phase was formalized in 2015 through the Action Plan on Base Erosion and Profit Shifting, introducing rules on transfer pricing, country-by-country reporting, and other measures aimed at enhancing tax transparency and integrity.

    The second phase was the result of subsequent developments in the global economy—particularly digitalization and the growing importance of intangible assets known as the Two-Pillar Solution.

    • Pillar One: focuses on reallocating taxing rights among jurisdictions, allowing countries where customers are located to tax a portion of the profits generated by certain large multinational groups, even when those companies do not have a physical presence there.
    • Pillar Two: introduces a global minimum corporate income tax rate of 15%, applicable to multinational enterprise groups with annual consolidated revenues of at least seven hundred and fifty million euros.

    Pillar Two operates through three core mechanisms:

    • The Income Inclusion Rule: A parent company must pay additional tax in its country of residence if its subsidiaries are taxed below 15% elsewhere.
    • The Undertaxed Profits Rule: This rule applies when the Income Inclusion Rule is not effective, allowing other group entities to account for the shortfall.
    • The Qualified Domestic Minimum Top-up Tax: This rule allows jurisdictions to collect the tax difference locally before it can be collected by other countries.

     The European Union adopted a directive making the rules applicable across Member States from January 1st, 2024, and countries including the United Kingdom, Japan, South Korea, and Australia have begun domestic implementation processes.  As of mid-2025, more than 140 jurisdictions have joined the Inclusive Framework.

    In essence, the global minimum tax, represents an ongoing multilateral effort to adapt the international tax framework to the structure of the global economy.

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  • Panama: A Country That Delivers – Off the EU Grey List and Moving Forward

    Panama: A Country That Delivers – Off the EU Grey List and Moving Forward

    Panama: A Country That Delivers

    Panama has taken a firm and decisive step toward strengthening its international reputation. Thanks to the collaborative efforts of both the public and private sectors, the country has gained the trust of international oversight bodies. The result? Panama is officially off the European Union’s grey list!

    Off the FATF Grey List: A Major Technical Milestone

    In October 2023, Panama was removed from the Financial Action Task Force (FATF) grey list, after demonstrating full compliance with the 40 recommendations issued by this international body. These guidelines aim to prevent money laundering, terrorist financing, and the proliferation of weapons of mass destruction.

    This achievement was not accidental; it was the outcome of a well-executed national strategy and sustained technical commitment.

    Why Was Panama Still on the EU List?

    Despite meeting the FATF’s technical standards, Panama remained on the European Union’s list of non-cooperative jurisdictions for political reasons. While the EU’s technical experts had recommended our removal, the final decision rested with the European Parliament, a political body with its own dynamics and interests.

    These “blacklists” or “grey lists” are tools used by entities such as the United Nations, the EU, and the OECD to push countries toward global standards and ensure protection against organized crime and financial abuse.

    Why Does This Matter to Everyday Panamanians?

    Being removed from these lists directly impacts Panama’s economy and financial opportunities. A stronger reputation translates into:

    • Easier international financial and commercial transactions
    • Better access to international credit and loans
    • Lower interest rates on public debt
    • Increased competitiveness and investor confidence

    In short: a more trusted Panama means a more prosperous Panama.

    The Critical Role of Lawyers and Technology

    Lawyers have played a key role in this achievement. They represent 97% of the Designated Non-Financial Businesses and Professions (DNFBPs) and have embraced technology as a strategic ally.

    By using the RUBF platform of the Superintendency of Non-Financial Entities, they successfully uploaded over 80% of all legal entities registered in Panama’s Public Registry—meeting obligations regarding ultimate beneficial ownership transparency.

    This commitment has not only helped improve compliance but also boosted business trust, creating better commercial opportunities.

    A New Way of Doing Business

    Legal professionals and business leaders alike understand that the way we do business has changed. Today, it is essential to:

    • Know your client
    • Apply proper due diligence
    • Assess the risks of each economic activity

    These are not burdens—they are strategic tools for making better decisions and enhancing Panama’s global image.

    What’s Next?

    Panama has done its part. Now it’s time to prove that our compliance was not just about getting off a list, but about building a more transparent and responsible country.

    We must now attract investors, double down on our efforts, and work toward economic growth, financial stability, and social wellbeing.

    Panama is not just off the list. Panama is stepping forward as a trustworthy, serious, and committed nation.

    Now more than ever, it’s time to protect our progress—and keep moving forward.

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  • Municipality of Panama approves payment of Municipal Taxes through cryptocurrencies.

    Municipality of Panama approves payment of Municipal Taxes through cryptocurrencies.

    Municipality of Panama approves payment of Municipal Taxes through cryptocurrencies

    Last April 2025, the Municipality of Panama signed an escrow agreement with Towerbank International Inc., a bank with a general license granted by the Superintendency of Banks, and Towertrust Inc., with a fiduciary license granted by the Superintendency of Banks, for the implementation of collection through cryptocurrencies.

    Likewise, the agreement in reference consists in that any tax, tribute, right, service fee, sanction, interest, fines or sums in any concept that must be paid to the Municipality of Panama may be made in cryptocurrencies approved by Towerbank International Inc. and Towertrust Inc., who will receive the cryptocurrencies in custody to then make the conversion to US dollars, as legal tender in the Republic of Panama, to then make the transfers to the Municipality of Panama.

    Among the main advantages of this service, we can mention the following:

    • The use of cryptocurrencies is voluntary and does not replace other payment methods.
    • No costs for the Municipality and without altering the tax regime.
    • Payments can be made from anywhere in the world.
    • Modernization of municipal management.
    • The Municipality will not handle or receive cryptocurrencies directly.

     

  • Panama institutes the Tax Lottery

    Panama institutes the Tax Lottery

    Panama Institutes the Tax Lottery: New Incentive for Tax Compliance

    By means of Executive Decree No. 26 of 2 June 2025, Panama instituted the Tax Lottery.

    All natural persons can participate in the Tax Lottery by depositing in the mailboxes designated by the Ministry of Economics and Finance through the Gaming Control Board, one or more sealed envelopes containing:

    • At least 5 invoices or documents equivalent to these, delivered to their customers by persons obligated to issue tax invoices.  The invoices must be in the name of the person participating in the Tax Lottery.
    • Invoices or documents equivalent to these must be issued by authorized tax equipment; or in the case of electronic invoices, they must be duly printed.
    • Only invoices issued up to two months prior to the date of the Tax Lottery will be accepted.

    Each Tax Lottery will award a total of 25 prizes in cash, distributing a total of US$110,000.00, in the following order:

    • Five prizes of US$10,000.00.
    • Ten prizes of US$5,000.00.
    • Ten prizes of US$1,000.00.

    Each envelope must contain on the outside, in a clear and legible manner, the following information:

    • Full name of the sender.
    • ID card number (for Panamanians), permanent resident card issued by the Electoral Tribunal or valid passport (for foreigners).
    • Tax address.
    • E-mail address.
    • Telephone number.

    At least four tax lotteries will be held during the year on the dates indicated by the Ministry of Economics and Finance.

     

  • Mandatory Update of the Taxpayer Registration Number (RUC) in Panama – What You Need to Know

    Mandatory Update of the Taxpayer Registration Number (RUC) in Panama – What You Need to Know

    MANDATORY UPDATE OF THE TAXPAYER REGISTRATION NUMBER (RUC)

    The General Directorate of Revenue (DGI) has issued Resolution No. 201-4488 dated June 4, 2025, launching a mandatory campaign to update the information contained in the Taxpayer Registration Number (RUC) for all individuals and legal entities.

    Key Points of the Resolution:

    • Mandatory requirement: All taxpayers are required to update their RUC information.
    • Deadline: The deadline to comply with this obligation is August 31, 2025.
    • How to update: The update must be submitted exclusively through the e-Tax 2.0 portal, with all required fields correctly completed.
    • Verification: All information submitted will be verified by the DGI.
    • Penalties: Failure to update the RUC or providing incomplete, incorrect, or insufficient information may result in fines ranging from US$100.00 to US$500.00, as established by the Tax Procedure Code.

    We urge all to complete this update as soon as possible to avoid penalties or disruption. Our team at AROSEMENA NORIEGA & CONTRERAS is available to assist you throughout this process.

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  • Tax Residency in Panama: Benefits and Opportunities

    Tax Residency in Panama: Benefits and Opportunities

    Tax Residency in Panama: Benefits and Opportunities

    Tax residency refers to the status that an individual acquires in a country, by which said country has the right to consider said individual as a taxpayer and, consequently, apply its tax regime.

    Panama considers as tax residents those individuals who remain in the country for more than 183 days within a fiscal year or the previous one, or those who establish their permanent residence in the territory.  This also includes those juridical entities incorporated in Panama or abroad that have their management and administration in the country, provided they are recorded in the Public Registry.

    Benefits of Tax Residency in Panama:

    1. Exemption from Taxes on Foreign Income: Panama applies the principle of territorial taxation, exempting income earned outside the country from income tax payments.
    2. Legal and Fiscal Stability: Panama maintains a predictable regulatory framework and international agreements that ensure tax security and protection against double taxation.
    3. Access to Double Taxation Agreements: The agreements signed by Panama with multiple countries prevent double taxation on the income of Panamanian tax residents.
    4. Benefits for Businesses and Entrepreneurs: Panama offers a modern infrastructure, a solid  banking system, and tax advantages for business with income from foreign sources.

    It is advisable to seek specialized legal advice to ensure compliance with the requirements necessary to obtain tax residency, and in this manner obtain full benefit from the advantages offered by Panama’s tax system.

  • New Compliance Regulations for Panamanian Legal Entities

    New Compliance Regulations for Panamanian Legal Entities

    IMPORTANT NOTICE

    New Compliance Regulations for Panamanian Legal Entities

    The Government of Panama enacted Law 52 of 2016 (“Law 52“), which establishes the requirement for all corporations, limited liability companies, and private interest foundations (the “Legal Entities”) to keep accounting records and supporting documentation. 

    Subsequently, the Government enacted Law 254 of 2021, (¨Law 254¨), which introduced amendments to Law 52 establishing additional accounting keeping requirements for Legal Entities. 

    Recently, the Executive Branch issued Executive Decree No. 177 of December 30, 2024 (the ¨Regulation¨), which regulates Law 52 as amended by Law 254 (the “Law”). The Regulation introduces new provisions that have an impact on the requirements imposed on Legal Entities regarding the obligation to keep accounting records and supporting documentation.

    What is the object of the Regulation ? 

    The object of the Regulation is to expand on the obligation for all Legal Entities to report annually their financial situation, as well as the obligation of custody on the part of the resident agents, in accordance with the Law .

    What is the scope of the Law and the Regulation ? 

    The provisions contained in the Law and the Regulation apply to all Legal Entities organized in accordance with the laws of the Republic of Panama, that do not carryout operations that are perfected, consummated or take effect in the Republic of Panama, as well as those that are dedicated exclusively to being asset holders within and/or outside the territory of Panama.

    What Legal Entities are exempt from compliance with the obligations contained in the Law and the Regulation ? 

    The following Legal Entities are exempt from the obligations contained in the the Law and the Regulation:

    • Those that are tax payers in the Republic of Panama.
    • Those that are listed on a recognized local or international stock exchange.
    • Those that are owned by an international, multilateral organization or of a State; and,
    • Those that are shipowners or ship charterers exclusively registered under Panama’s international Merchant Marine Service.

    What are the categories of Legal Entities described in the Regulation and what documents must they deliver to the resident agent?

    The Regulation describes the following categories of Legal Entities and the documents they must deliver to their resident agent:

    1. Panamanian Legal Entity.

    Those Legal Entities that are dedicated exclusively to being asset holders within and/or outside the Republic of Panama, whose final beneficiaries reported to the Superintendence of Non Financial Subjects (the “Superintendence”) are exclusively Panamanian citizens.

    In this case, the legal Entity must deliver annually to the resident agent, a sworn declaration certifying the following:

    • That the legal entity is dedicated exclusively to being an asset holder within and/or outside the Republic of Panama; and,
    • That the legal entity does not carryout operations or activities that generates taxable income in the Republic of Panama.

    Notwithstanding the above, those Legal Entities whose final beneficiaries reported to the Superintendence are exclusively Panamanian citizens, which generate taxable income outside the Republic of Panama, must deliver annually to the resident agent, anyone of the following documents:

    • A financial statement; or,
    • A brief outline of the elements of the financial situation, the model of which is attached to the Regulation issued by a member of the board of directors or foundation council, as the case may be, the final beneficiary or a duly authorized representative of the latter.

    2. Foreign Legal Entity.

    Those Legal Entities that are dedicated exclusively to being asset holders within and/or outside the Republic of Panama and/or generate income, whose final beneficiaries reported to the Superintendence, result in at least one foreigner. 

    In this case, the legal entity must deliver annually to the resident agent any one of the following documents:

    • A financial statement; or,
    • A brief outline of the elements of the financial situation, the model of which is attached to the Regulation issued by a member of the board of directors or foundation council, as the case may be, the final beneficiary or a duly authorized representative of the latter.

    3. Legal Entity without operations.

    Those Legal Entities that regardless of whether the final beneficiary reported to the Superintendence is Panamanian or foreigner do not carryout any commercial activities, nor do they generate income within and/or outside the Republic of Panama, nor do they have assets within and/or outside the Republic of Panama. 

    In this case, the legal entity must deliver annually to the resident agent, a certification or sworn declaration that contains the following, to wit:

    • That it has not carried out nor does it engage in any commercial activity, nor does it perform any type of operations;
    • That it does not have income, nor does it perform activities that generate income within and/or outside the Republic of Panama; and,
    • That it does not have assets within and/or outside the Republic of Panama.

    Who issues the sworn declaration or certification required from the Legal Entities? 

    The certification or sworn declaration must be issued by a a member of the board of directors or foundation council, as the case may be, the final beneficiary or a duly authorized representative of the latter. 

    What are the obligations of the resident agent?

    The resident agent must submit annually a sworn declaration to the Directorate General of Income (DGI), which includes a detailed list of those Legal Entities of which it has the information established in the Regulation. 

    The sworn declaration must include the name and the Taxpayer identification number (known by the Spanish acronym of RUC), as of January 1, 2025 the obligation to report to the DGI will be no later than June 15 of each year.

    The presentation of this document will release the resident agent of the obligation of custody over the accounting records and supporting documentation.

    The lack of presentation of the sworn declaration on the part of the resident agent could result in the penalties established in Law 254.

    How long do the Legal Entities have to maintain accounting records and supporting documentation? 

    The Legal Entities must maintain accounting records and supporting documentation for a minimum period of five (5) years, either in physical or digital format, from the date of the respective incorporation or constitution and, in the event of dissolution, for a period of five (5) years after the registration of the instrument of dissolution in the Public Registry office in Panama.

    What are the penalties for the Legal Entities in not complying with the obligations contained in the Law and the Regulation ? 

    Not complying with the obligations contained in the Law and the Regulation could result in the following penalties for the Legal Entities:

    • Fines ranging from US$5,000.00 up to US$100,000.00.
    • Suspension of corporate rights.
    • Inability to register documents or receive certifications from the Public Registry office in Panama.

    What is the obligation of the resident agent if the Legal Entities do not comply with the obligations contained in the Law and the Regulation ? 

    The resident agent is required to resign from his position if the Legal Entities they represent fail to comply with the obligations contained in the Law and the Regulation. 

  • Cryptocurrencies in Panama: Legal Challenges and Investor Risks

    Cryptocurrencies in Panama: Legal Challenges and Investor Risks

    Cryptocurrencies in Panama: Legal Challenges and Investor Risks

    What are cryptocurrencies?

    Cryptocurrencies are digital assets that are used for purchases, sales, investments and financial transactions in general. Currently, there are a few establishments in Panama that accept payment of goods using cryptocurrencies.

    Current state of regulation in Panama

    Notwithstanding the above, presently there is no legal framework that regulates cryptocurrencies in Panama, moreover, in July of 2023 the Supreme Court of Justice declared unconstitutional a bill which intended to regulate the use of cryptocurrencies.

    Warnings from the Superintendence of the Securities Market

    The fact that there is no regulation in force leaves users and investors of cryptocurrencies in Panama unprotected.  In this respect, by means of note dated 25 April 2018, the Superintendence of the Securities Market of Panama warned investors and the public in general to be prudent and be aware of the risks associated with cryptocurrencies, due to the fact that:

    1. They do not have a legal framework and therefore, are not under any supervision or oversight by a financial regulator in the Republic of Panama.
    2. They have no inherent value, they are intangible and their circulation is through the internet.
    3. They do not have the approval nor regulation of a central authority.
    4. They are vulnerable to money laundering.
    5. They are highly volatile and speculative assets.
    6. There is a high risk of fraud.

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    Concerned about the legal implications of cryptocurrencies in Panama? Contact ANORCO for expert legal advice on navigating the risks and opportunities of digital assets

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  • The IMG or GloBE and its implications

    The IMG or GloBE and its implications

    The IMG or GloBE and its implications

    Since 2017, the G20 and the OECD have collaborated on a project to address the erosion of the tax bases and profit shifting, which is based on two fundamental pillars.

    Pillar One, which seeks to distribute the results obtained by multinational companies, allowing them to be taxed where their clientele is located, and Pillar Two, which proposes establishing an effective global minimum tax of 15% (IMG or GloBE).  For the IMG to be applicable to a company the joint billing (Headquarters and subsidiaries) must reach 750 million euros or its equivalent, amount which is subject to review in 2030.

    The implementation of the IMG seeks greater tax and reputational certainty. However, it also presents challenges for governments in the application of international agreements and treaties, requiring adjustments in national tax legislation, as well as for companies which will have to adjust their guidelines to comply with the new regulations.

    Currently in Panama, the Directorate of International Financial and Fiscal Strategy and the General Directorate of Revenue are currently studying the possible ways of implementing the IMG, without affecting the legal security of close to 10 local Panamanian capital companies and 60% of foreign capital companies located in the country.

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    Ready to navigate the complexities of global taxation?
    Contact one of our expert lawyers in tax planning today for tailored guidance and solutions

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  • Understanding ITBMS Rates in Panama: 7%, 10%, and 15%

    Understanding ITBMS Rates in Panama: 7%, 10%, and 15%

    SME and their ITBMS TAX  obligations

     

    For small and medium-sized companies in Panama, the Transfer Tax on Personal Property and Services (known by the Spanish acronym of ITBMS) is similar to the value-added tax that exists in other countries.

     

    The following are some important aspects that small and medium-sized companies should take into consideration:

     

    1. REGISTRATION: When the annual income of the companies exceeds USD$36,000.00, they must register as a taxpayer of the ITBMS with the Directorate General of Income (DGI);
    2. BILLING AND DECLARATIONS: Companies must issue invoices that include the ITBMS in their sales of goods and services;
    3. ITBMS RATES: In Panama, there are different ITBMS rates: 7%, 10%, and 15%. It is important that small and medium-sized companies know what rates apply to their products or services;
    4. EXEMPTIONS AND REDUCED RATES: Some goods and services are exempt from the ITBMS, while others may have reduced rates. The companies should be informed on the exemptions and reduced rates applicable to their business in order to properly comply with the tax regulations;
    5. TAX ADVICE: Due to the complexity of the tax legislation and possible updates, it is advisable to seek tax advice to ensure correct compliance with the obligations related to the ITBMS and other taxes.
  • Frequently asked questions about the Single and Private Registry of Final Beneficiaries

    Frequently asked questions about the Single and Private Registry of Final Beneficiaries

    Frequently asked questions about the Single and Private Registry of Final Beneficiaries

     

    1. What is the Single and Private Registry of Final Beneficiaries (known by the Spanish acronym of RUBF)?

    It is a system whereby lawyers that offer the services of resident agent, register the legal entities that they represent and their final beneficiaries.

     

    1. What is the entity responsible for ensuring compliance?

    The Superintendence of Non-Financial Subjects (known by the Spanish acronym of SSNF).

     

    1. Is the registration to the RUBF mandatory?

    All resident agents have the obligation to register with the RUBF.

     

    1. Is there any cost to register with the RUBF?

    There are no registration costs.

     

    1. What are the steps to follow to comply with the RUBF?

            ◦ Register as a resident agent;

            ◦ Register the corporation; and

            ◦ Register the final beneficiaries.

     

    1. Legal basis?

             Law 129 of 2020 and Executive Decree No.13 of 2022.

  • Single and Private Registry of Final Beneficiaries in Panama: Enhancing Transparency and Combating Money Laundering

    Single and Private Registry of Final Beneficiaries in Panama: Enhancing Transparency and Combating Money Laundering

    Single and Private Registry of Final Beneficiaries of Legal Entities in Panama: Transparency and Fight against Money Laundering

     

    Pursuant to Law 129 of 2020 and Executive Decree No. 13 of 2022, the Single and Private Registry of Final Beneficiaries of Legal Entities (known by the Spanish acronym of RUBF) was created, as a tool that promotes transparency in the financial system, prevents money laundering, fights against terrorist financing and strengthens the integrity of the business system of the country.

     

    The resident agents are required to register in the RUBF and to provide the following information:

     

    • Data of the legal entity; and
    • Data of the final beneficiaries.

     

    The law designates the Superintendency of Non-Financial Subjects, as the governmental entity responsible for the administration and custody of the RUBF.

  • Electronic Billing in Panama: Taxpayer Obligations and Exemptions

    Electronic Billing in Panama: Taxpayer Obligations and Exemptions

    Electronic Billing in Panama

     

    Pursuant to Decree No. 147 of May 26, 2021, obligations are established, requiring that all taxpayers, be they persons or juridical entities, must issue invoices or equivalent documents to legitimize their operations, otherwise, sanctions may be imposed.

     

    In this regard, the liberal, artisan, and artistic professions, carried out independently or through civil companies, are exempt from the use of a fiscal printer.  Consequently, lawyers are exempt from the obligation to of invoicing using fiscal equipment, however, they can adopt the Electronic Billing model.

  • Promoter of Free Zones in Panama

    Promoter of Free Zones in Panama

    Promoter of Free Zones in Panama

     

    Free Zones are part of a special simplified global regime for the establishment and operation of companies that contribute to the development of the country and the creation of jobs, framed in the global goods and services economy.

     

    The Free Zones in Panama are governed by Law 32 of 2011 and regulated by Executive Decree No. 62 of 2017, which establish a wide range of tax, royalty and tariff benefits; as well as special flexible immigration and labor regimes that encourage business activity.

     

    The licenses granted by the Ministry of Commerce and Industries (MICI) to operate in the to Free  Zones are:

     

        1. License as Promoter and/or Free Zone Operator

        2. Operation License as a company established in the Free Zone

  • Electronic Documents and Signatures Regulations in Panama

    Electronic Documents and Signatures Regulations in Panama

    Electronic Documents and Signatures Regulations in Panama

     

    Law 51 of 2008, as amended by Law 82 of 2012 (the “Law”) establishes the regulatory framework for the creation, use and storage of electronic documents and the electronic certification of signatures in Panama.

     

    The Law also establishes the regulatory framework for certain commercial acts carried out through the Internet, mainly in relation to information concerning the execution of electronic contracts and the conditions relating to the validity and effectiveness of such contracts; the obligations and responsibilities of commercial service providers through the Internet, including those who act as intermediaries in the transmission of content through communication networks; including offers, promotions and contests; and the penalties applicable to commercial service providers through electronic means.