On May 27, 2019, Panama issued Decree No. 46 to introduce country-by-country (CbC) reporting requirements.
According to Article 2 of the decree, ultimate parent companies of multinational groups, tax resident in Panama, with consolidated income exceeding €750 million, or its equivalent in Balboas at the exchange rate on January 1, 2015, during the fiscal period immediately preceding the reporting fiscal period are required to submit the CbC report on an annual basis.
The Panamanian CbC report must include the following information:
- Amount of income, earnings or losses before taxes, income tax paid, income tax earned, declared capital, retained earnings. Number of employees and tangible assets other than cash or cash equivalents, with respect to each of the jurisdictions in which the multinational group operates.
- Identification of each group member entity, indicating the jurisdiction of its fiscal residence. Where the jurisdiction of tax residence is different from the fiscal jurisdiction in which it was legally constituted, the group entity must provide the name of the latter. Nature of the main activities of the entity’s business.
- Any additional information or explanation that is necessary or that facilitates the understanding of the information in the CbC report. (Article 4 of Decree No. 46)
The reporting entity must annually submit the CbC report in XML Schema within 12 months following the closing date of the corresponding fiscal period to the Panamanian tax authorities (Dirección General de Ingresos or DGI), starting with the 2018 fiscal year. (Article 5 of Decree No. 46)
A systematic breach of a jurisdiction occurs where a jurisdiction that has an agreement with Panama has suspended the automatic exchange of information or has failed to comply with the automatic exchange of CbC reports of multinational groups that have entities in Panama. (Article 1 of Decree No. 46) According to the OECD, officials from Panama signed the Multilateral Competent Authority Agreement on the Exchange of Country-By-Country Reports (CbC MCAA) on January 24, 2019.
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