Since 2016, there has been a requirement to maintain accounting records and supporting documentation for legal entities. The applicable legal entities are corporations, limited liability companies and private interest foundations that do not engage in activities and operations that are perfected, take place, or have effects within the Republic of Panama. The requirement also includes legal entities exclusively used to hold assets within or outside the Republic of Panama.
To comply with the legal requirements of the Panamanian jurisdiction, legal entities for which we act as Panamanian resident agents should provide us, annually, with the following:
1. Original or copies of their accounting records for the fiscal year that ended on 31st December of the previous year.
Accounting records for the fiscal year that ended on 31st December 2022 should be provided to us by 30th April 2023 at the latest.
Afterwards, accounting records should be provided to us by 30th April each year. In other words, the accounting records as of 31st December 2023 must be delivered to us no later than 30th April 2024, and so on at the expiration of the subsequent fiscal years.
2. Address where the original accounting records and supporting documentation of the legal entity are kept, and the name and contact details of their custodian, unless the original accounting records are held at the offices of the resident agent in the Republic of Panama.
This information should be provided to us by filling out, signing, and returning to us the accounting records form that you will find in the following link:
If any of your legal entities has not complied with these requirements, please ensure that they do so to avoid possible sanctions.
If a legal entity fails to comply with the requirements, its resident agent should report such fact to the authorities, and such non-compliance could result in:
A fine to the legal entity, which may range from US$5,000.00 to US$1,000,000.00;
The suspension of the corporate rights of the legal entity; and
The inability to register any document in the Public Registry and to obtain certificates issued by such Registry.
In addition, the resident agent may resign as such for a legal entity that does not comply.
How accounting records should be provided to us, depend on the activities of the relevant legal entity, as follows:
1. Legal entities engaged exclusively in being holding companies for assets, such as real estate, shares, participation quotas, and bank accounts, among others, must provide, as accounting records, a document containing the following information:
• Value of the assets.
• The income generated by such assets; and
• The liabilities relating to such assets.
For example, the information may be provided with an annual balance sheet and income statement reflecting the amounts of the legal entity's assets, liabilities and income.
2. Legal entities that carry out commercial acts outside the Republic of Panama must provide, as accounting records:
• A journal and a ledger.
3. Legal entities engaged in the purchase and sale of negotiable instruments and public or private securities, to profit from their resale or by any other means of market speculation, must deliver the following:
• Account statement of the custodian; or
• A balance sheet.
Should you have any questions, please do not hesitate to contact us at Contact@viss.com.hk.
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