New Regulations for Panama's Accounting Records: Executive Decree 177 of 2024 - Key Changes for Companies and Resident Agents
Edgar Young, PhD., Partner / Attorney-at-Law
Pacifica Legal
Last updated: February 2025
Key Updates for Panama Corporate Entities
Background
Panama has recently introduced significant changes to its accounting records regulations through Executive Decree No. 177 of December 30, 2024 (Decreto Ejecutivo No.177 de 2024) (the “Decree”). This new Decree replaces the short-lived Executive Decree No. 168 of 2024 and brings important modifications to the implementation of Law 52 of 2016 (the "Accounting Records Law"), as amended by Law 254 of 2021.
The provisions contained in the Accounting Records Law and the Decree apply to all corporations, limited liability companies, and private interest foundations established in Panama, - that either (i) operate exclusively outside Panama, or (ii) function solely as asset holding companies (with assets located within or outside Panama).
New Categories of Legal Entities
The Decree establishes three distinct categories of Panamanian legal entities, each with specific accounting requirements:
A. Panamanian Legal Entities
Must exclusively function as asset holding companies (within and/or outside Panama)
Beneficial owners (UBO) must be exclusively Panamanian citizens
Required documentation: Annual sworn declaration confirming their asset-holding status
B. Foreign Legal Entities
Dedicated to asset holding and/or income generation (within and/or outside Panama)
Must have at least one foreign citizen as an ultimate beneficial owner
Required documentation: Financial statements or summary of financial position
C. Non-Operating Legal Entities
Must have no commercial activities
Must generate no income within or outside Panama
Must hold no assets within or outside Panama
Required documentation: Annual certification of inactive status confirming inactive status
Compliance Deadlines and Requirements
Reporting Deadlines:
Legal entities must submit accounting records to their resident agents by April 30th of each year for the previous fiscal period.
(Starting January 2025) resident agents must file declarations by June 15th of each year.
Special deadline: Resident agents have until March 31, 2025, to submit declarations for accounting records covering 2021, 2022, and 2023
Documentation Requirements:
The Decree introduces specific documentation requirements for each category of legal entity:
Panamanian Legal Entities: must provide an annual sworn declaration regarding their asset-holding status and absence of taxable income in PanamaFinancial statements or financial position summaries
Foreign Legal Entities: must submit either financial statements or a summary of their financial position
Non-Operating Legal Entities: must provide certification of their inactive status and absence of assets or income.
Important Change in Document Formalities
A significant modification introduced by the new Decree is the simplification of signature requirements for accounting records. Previously, financial documents required certification by a Certified Public Accountant (CPA). Under the new regulation, these documents can now be signed by:
A member of the board of directors (for corporations);
A member of the foundation council (for private interest foundations);
The ultimate beneficial owner OR a duly authorized representative of the ultimate beneficial owner.
Notable Changes in Regulatory Framework
Several significant modifications have been introduced:
Elimination of the extension period for submitting 2021-2023 accounting records
Removal of the option to request extensions for annual accounting record submissions
Introduction of specific documentation requirements for different entity categories
Exemptions from Annual Filing Requirements
The Decree maintains certain exemptions from compliance requirements for specific categories of legal entities:
Tax residents of Panama
Companies listed on recognized local or international stock exchanges
Entities owned by international organizations or states
Ship owners or charterers registered exclusively under Panama's international merchant marine service.
However, these exempt entities must still maintain their accounting records and supporting documentation, with the obligation to provide such records within twenty business days upon request from competent authorities through their resident agent.
Penalties
Non-compliance with the Accounting Records Law and the new Decree carries significant penalties:
Fines ranging from US$5,000 to US$1,000,000
Potential suspension of corporate rights
Risk of forced liquidation of the legal entity
Furthermore, resident agents who fail to comply with their reporting obligations may face sanctions under Law 254 of 2021.
You can have access to the original Spanish version of the Executive Decree 177/2024 here.
For a complete English translation of Executive Decree 177/2024, please contact us at info@pacifica.legal
Our firm specializes in Panama corporate law and can provide comprehensive guidance on these new requirements.
For more detailed information about Panama's accounting records requirements or to discuss how these changes might affect your business, please contact our corporate law team at info@pacifica.legal