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Panama's offshore companies must keep accounting

Contributed by Caporaso & Partners Law Office
30 December, 2021


Law 624 of 2021 modifies the accounting systems of Panama's offshore companies and real estate holdings.

Panama's offshore companies are the ones that don't carry out operations in Panama, but now the new Law 624 obligates them to keep accounting records. This law has taken investors and resident agents - who receive an overload of work and additional expenses - by surprise.

The approval of the projected Law 624 of 2021 by Panama's National assembly, will increase controls over offshore companies' accounting. This is another step toward humoring the demands of the Financial Action Task Force (FATF).

Two years ago, the FATF included Panama in its "grey" list of countries with deficiencies in controlling money laundering. However, this international organization feels that the country hasn't complied with the pact. And, to put more pressure, the FATF threatened to pass Panama onto the "blacklist", which contains only Iran and North Korea.

Law 624 is among the legal steps adopted by the National assembly. It introduces important changes in several legislations. Said legislations are linked to international fiscal transparency, the prevention of money laundering and the Financing of Weapons of Mass Destruction Proliferation.

One of the modified laws is Law 52 of 2016, related to accounting records of companies in Panama. All legal persons who don't carry out operations inside Panama, as well as those who only hold assets, will have to keep accounting records. Further, they will have to keep backup documentation.

Legal persons will have to offer information that shows the value of the assets that they hold, as well as the income deriving from said assets. This is in addition to liabilities linked to those assets. Meanwhile, legal persons that carry out trade outside of Panama will have to share a daily log and a longer one.

In operational terms, to get up to date with Law 624, it is required that low-cost offshore companies plan a budget. This is so they can create an accounting structure that is able to create informative output as demanded by the law.




 


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