Highlights of the Country by Coutry Report (CbCR) obligation in Panama

The Official Gazette No. 28782-A of Monday, May 27, 2019, published Executive Decree No. 46 of May 27, 2019, which establishes the regulatory framework for the Country-by-Country Report. In this sense, the obligation to file the annual Country-by-Country Report shall be incumbent upon the so-called Ultimate Parent Company of those Multinational Groups whose consolidated revenues, in a fiscal period, exceed 750,000,000 million euros and which is resident for tax purposes in Panama. Hereinafter, this will be the "Reporting Entity".

Keep in mind that the information requested in the report is related to the amount of revenue obtained from related and unrelated companies, the income (loss) before income tax paid, accrued taxes, stated capital, retained earnings, number of employees, and tangible assets other than cash or cash equivalents, as well as the nature of the principal activity or activities of each of the companies of the corporate group. Subsidiaries usually do not have this level of detail, so it must be raised to the highest level, i.e., the parent or controlling company.

The deadline for filing the Country-by-Country Report is 12 months after the fiscal year-end date.
Each Multinational Group Entity is required to submit an individual notification.
Notification: The entity Member or Belonging to a Multinational Group that resides for tax purposes in Panama shall notify the General Directorate of Revenue of the identity, tax residence of the Reporting Entity, as well as the tax period used by the respective Multinational Group.

Failure to comply will result in the application of the penalties provided for in Article 756 of the Tax Code: US$1,000 to 10,000: Failure to provide any information requested by the Tax Administration in the course of the audit proceedings.

US$1,000 to 5,000 the first time;
US$5,000 to 10,000 for repeat offenses temporary closure of the establishment.

For a better understanding, a description of a Group Member Entity is as follows:

Any separate entity of the Multinational Group included in the Consolidated Financial Statements of the Multinational Group, or which would be included if its shareholding in such entity were traded on a stock exchange.
Any entity excluded from the Consolidated Financial Statements of the Multinational Group on the grounds of size or materiality; and
Any permanent establishment of any separate entity of the Multinational Group included in (1) or (2) above, provided that the entity prepares, for such permanent establishment, separate Financial Statements for financial reporting, regulatory, tax or internal management control purposes.

As a starting point, each member company or company belonging to a group must:

Make sure that the group to which the company belongs is under the obligation of such presentation.
In the event that, if they have the obligation, they must confirm who is the designated or reporting entity of the group, with this initial data they can start the management of their notification.
A letter signed by the legal representative specifying who is responsible for compliance with the CbCR, and his/her passport, must be attached to the registration form.
The notification must be submitted for the first year only, with an obligation to update the notification if any information changes.