Financial Regulatory Compliance in Panama: a Guide

Anyone doing business in the Panamanian market or planning to launch there will have to adhere to financial regulatory compliance in Panama if they wish to maintain their good standing with local authorities and avoid legal inconveniences.  

A Biz Latin Hub map of Panama, where you will need to adhere to financial regulatory compliance when doing business
A map of Panama

Financial regulatory compliance is an important element of corporate compliance and is a key part of any corporate secretarial services package offered by third-party providers. Corporate secretarial services are widely referred to by the abbreviation ‘cosec.’

A well-established corporate lawyer in Panama will be able to advise you on a good accounting firm in the Central American country who could assist you with financial regulatory compliance. 

However, if you are planning on seeking out additional assistance, such as with recruitment, visa processing, or ongoing operational support, you may find that seeking out the services of a provider of back-office services in Panama is your best bet. 

See Also: Business formation Panama

Because such a firm will be able to cover all of your needs under one services agreement, meaning that you will enjoy the convenience of only having to deal with one provider.

If they are also active in other markets in the region, they will be able to provide cross-border support and assist with future expansion into other markets.

If you are planning on starting a business in Panama, read on to learn the fundamentals of financial regulatory compliance in one of Latin America’s most prosperous nations.

Or contact us now to find out more about how we can support you doing business in Panama, or any of the other 15 markets in Latin America and the Caribbean where we have offices staffed by local teams of professionals.

Panama’s stable political environment, high levels of prosperity, relatively low levels of crime, and famed offshore banking system make it a highly popular destination for investors and corporations doing business in the region.

Those factors combine with prime logistics, with Panama City just a few hours by plane from multiple major US cities, while the capital’s Tocumen International Airport has direct flights to various major cities in Europe and throughout the Americas. 

The presence of the Panama Canal also means that the country is a critical hub for trade and commerce, with approximately 14,000 ships passing through the waterway each year.

The Canal is also crucial to the economy, accounting for approximately 6% of gross domestic product (GDP), which hit $66.8 billion in 2019, after increasing five-fold over the previous two decades.

That exponential growth has been driven in part by a highly favorable environment for doing business, which saw the country achieve a very high score of 92 in the World Bank’s Doing Business 2020 report to be listed as one of the best countries in the world for doing business.

Meanwhile, the UN’s 2020 World Investment Report highlighted how Panama receives more foreign direct investment (FDI) than any other country in Central America, as well as several much bigger nations in South America. 

Another factor that makes the country attractive to investors is the fact that it is one of Latin America’s dollarized economies, providing a greater degree of currency stability than is seen in some markets.

A Biz Latin Hub infographic providing a snapshot of the market in Panama, where you will have to adhere to financial regulatory compliance when doing business
A snapshot of the market in Panama

Financial regulatory compliance in Panama: key responsibilities and dates

While some of the finer details of financial regulatory compliance in Panama can depend on the type of entity you have, a number of obligations are applicable to offshore and onshore companies.

Financial regulatory compliance in Panama: offshore companies

If you form an offshore company in Panama, you will need to adhere to the following:

  • Annual renewal of the corporation before the National Tax Authority, including a yearly fee of $300 – which will be due by June 30 if the company was incorporated during the first half of the calendar year, or December 31 if incorporated during the second half of the year.
  • Keep corporate books updated – something a provider will do as part of ‘statutory health check’ services.

Note that the financial year in Panama runs from January 1 to December 31 and company books must be up to date within three months of the close of the financial year.

Onshore companies

An onshore company in Panama must adhere to more stipulations with regard to financial regulatory compliance. Obligations include:

  • Submitting an annual income tax declaration to the National Tax Authority, with declarations for a given tax year due no later than March 31 of the following year.
  • VAT declarations must be submitted on a monthly basis, within a given month’s declaration due within 15 days of the following month.
  • Annual renewal of the corporation before the National Tax Authority

Note that, unlike in many countries, there is no obligation to hold an annual shareholder meeting unless the entity goes through a structural change.

Biz Latin Hub can assist you with financial regulatory compliance in Panama

At Biz Latin Hub, we provide integrated back-office services to investors and corporations doing business throughout Latin America and the Caribbean. That includes financial regulatory compliance in Panama, as well as in the other 15 markets where we have local teams in place.

Our portfolio of services includes accounting & taxation, company formation, corporate legal services, hiring & PEO, and visa processing, among others, while our unrivaled presence in the region means we are ideally places to support multi-jurisdiction market entries and cross-border operations.

Contact us today to find out more about how we can help you reach your commercial goals in Panama.

Or read about our team and expert authors.

Key services offered by BLH including legal services, accounting & taxation, hiring & PEO, due diligence, tax advisory, and visa processing
Key services offered by Biz Latin Hub

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