Regulated by means of Act No. 33 of June 33th, 2010 and No. 52 of August 28th, 2012.
The tax residency certificate is only applicable to residency of countries with which Panama has subscribed double taxations treaties. The legal entity may prove its tax residency in two ways that it has means of directions and administration in the Republic of Panama and that it has a notice of operations in force. In addition, a tax residency is considering a foreign legal entity if the person has means of directions and administration in the Panamanian territory.
Based on the article 11 of Decree No. 985 of August 7th, 2013 stipulated that without prejudice that affects the process to determine if a legal entity has means of directions and administration in the Panamanian country, the following evidence has to be consider to be determined as a tax residency:
- Celebrate business meeting about means of directions and administration with the board of directors in Panamanian territory.
- If the decisions about means of directions and administration are taken by a third party living in the Panamanian territory that has be empowered by members of the board of directors.
- Legal Entities doing business activities in Panamanian territory as long as the main office is located in the Republic of Panama.
About the persons who may apply: The currently agreement is applicable for a residency person of one or both countries. The taxes agreements are the following:
- Spain: Income taxes, corporation's taxes, asset taxes.
- Panama: Income taxes and operations taxes notice.
Requirements to obtain a tax residency (Legal Entity)
- Power of attorney
- Memorandum on plain paper sending to the taxation General Director of Panama, which includes: Identification from the applicant, 2. Indicated that the tax residency certificated will be based on the international taxes agreement (specify which one); 3. Be specific about the commercial operation doing in Panamanian territory.
- Validity certificate of the company from the Public Register of Panama.
- Copies notarized of the identity documentation or passport from the legal representative.
In addition, all the applicants have to provide evidences that indicate the existence of means of directions and administration in the Republic of Panama.
The following documents are evidences of means of directions and administrations in the Republic of Panama.
(In case that the meetings are celebrated in Panamanian territory)
- Minutes of meeting: The meeting celebrated by the board of directors in the Republic of Panama making decisions about means of direction and administration.
- Copies of identity documentation from those who participated from the meeting in the Republic of Panama.
In case of directions and administrations is transferred to a third party:
- Legal document that prove means of directions and administration to a third party in the Republic of Panama.
- Identity documentation or passport from the third party
In case of the company has their main office in the Republic of Panama is necessary:
- Legal operation notice
- Evidence that the company has establish the main office in the Panamanian territory through a lease contract or property deed
- Utilities invoices of water, electricity, telephone, among others.
Note: The tax residence certificated has a validation of one year in the Republic of Panama.
Note: The number of documents has to be taken as a reference or guidelines, but it has not been consider as exhausted evidence. The document may change based on the conditions or activities for each society.
Note: The process to obtain a fiscal residence certificate takes a period of 3 to 5 months before the Income General Direction of Panama.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.