Why Conduct an Entity Health Check in Panama?

Corporate compliance in Panama is constantly changing. Therefore, conducting an entity health check in Panama will ensure that your business or the company you plan to do business with complies with local legislation.

Foreign executives doing business in Panama must undertake an entity health check regularly. Hiring a trusted local partner to review the status of your company in terms of corporate compliance will protect your business from penalties and avoid risks.

What is an entity health check in Panama?

Woman explaining how to conduct an entity health check in Panama on a whiteboard.
 An entity health check is important to mitigate risks when doing business in Panama.

An entity health check in Panama is an audit conducted by independent experts to examine accounting and legal compliance.

An entity health check reviews if a company doing business in the country complies with tax declarations, labour regulations, monthly reports, and accounting registries. As a result, there is a better understanding of the overall corporate compliance landscape.

The main objective of conducting an entity health check is to identify any discrepancies within a company that might affect business operations. 

Why is it important to conduct regular entity health checks?  

 An entity health check in Panama is important to mitigate risks when doing business in the country. It covers various aspects of a company’s activities, including the legal, accountancy, tax and human resources practices. This examination seeks to understand if a legal entity established in Panama is and has been fully compliant with local corporate regulations.

Keeping up with regulatory updates across Latin America can be complicated. If you are expanding your business, conducting an entity health check is the best way to ensure the good health of your business.

Types of compliance in Panama

Legal compliance 

 The documents required for legal compliance in Panama are: 

  • Evaluation and review of contracts signed with third parties.
  • Corporate books and accounting books (including minutes of the Assemblies).
  • Shareholders meeting report.
  • Rental agreements or leases.
  • Other key legal documents for the company involved.

Tax compliance 

Business man using his computer to  conduct an entity health check in Panama. He is also taking notes on a notebook.
Complying with tax regulations is critical when doing business in Panama.

Complying with tax regulations is critical when doing business in the country. La Dirección General de Ingresos is continuously verifying that companies comply with monthly/annual declarations and tax obligations. 

Companies must submit monthly social security contributions and declarations. Be cautious with this procedure, as penalties from the Social Security authorities are severe and can lead to prison. Likewise, companies that develop local activities must submit an annual tax declaration to the corresponding township.

Furthermore, business owners must also consider special tax regulations that apply to companies that are part of a special regime like SEM (Sede de Empresa Multinacional) or special economic zones.  

Engage with Biz Latin Hub to conduct your entity health check in Panama

It is essential to communicate with experienced and reliable professionals able to conduct entity health checks in Panama. This will protect your business operations from potential penalties imposed by government authorities.

At Biz Latin Hub, our multilingual team of legal experts have broad experience conducting entity health checks for companies in Panama and Latin America. With our full suite of market entry and legal advisory services, we offer support and advice to improve your company’s corporate compliance, increase its value, and manage risks.

Contact us today for personalized assistance on how to successfully run your operations in Panama.

Learn more about our team and expert authors.

Biz Latin Hub market entry and back-office services.

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