Global Tax Alert (News from Americas Tax Center) | 25 October 2013

Panama issues resolution on procedure to secure Double Tax Treaty benefits

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Panama’s Tax Authority (Autoridad Nacional de Ingresos Públicos, a.k.a. ANIP) issued Resolution No. 201-10861 (the Resolution), setting out the accreditation procedure to secure benefits under Double Tax Treaties (DTT) signed by Panama. This Resolution became effective on 17 September 2013.

The Resolution expands the provisions of Article 762—Ñ of the Tax Code, which require that taxpayers file a formal notification of entitlement before the tax authorities to secure DTT benefits.

Accreditation

The persons or legal entities that want to apply DTT benefits must file a notification of entitlement before the tax authorities at least 30 days before carrying out the transaction for which they seek such DTT benefits.

Submission method

The accreditation, namely the right to apply DTT benefits, is triggered by the taxpayer’s written notification addressed to the tax authorities’ administrator, which must at least include the following information:

  • Clear and express identification of the interested party
  • Clear and express identification of the beneficiary
  • Reference to the provision contained in the DTT that the interested person wishes to apply
  • Nature of the transaction and a detailed description thereof

The following documents have to be submitted together with the notification:

  • Tax residency certificate of the beneficiary, authenticated and translated, if necessary (note: tax residency certificates issued by foreign authorities are valid for 12 months as of their date of issuance)
  • Copy of the Public Registry Certificate of the interested party (for legal entities)
  • ID or passport copy of the interested party or legal representative, as the case may be
  • Notarized power of attorney if submitted by an attorney-at-law
  • Other evidence in accordance with the relevant provision of the DTT to be applied

Validity period

The accreditation and entitlement to DTT benefits is effective as follows:

  • When the interested party does not provide information about the frequency of the transaction, the accreditation is effective only for the transaction described in the notification.
  • When the interested party notifies that the transaction will be performed periodically and its frequency is detailed in the notification, then the accreditation is effective during the indicated period.
  • When the indicated period exceeds the period for which the tax residency certificate of the beneficiary is valid, then accreditation is only valid until the expiration of such tax residency certificate.

For additional information with respect to this Alert, please contact the following:

Ernst & Young Limited Corp., Panama City
  • Luis Eduardo Ocando
    +507 208 0144
    luis.ocando@pa.ey.com
  • Isabel Chiri
    +507 208 0100
    isabel.chiri@pa.ey.com
Ernst & Young, S.A., San José, Costa Rica
  • Rafael Sayagués
    +506 2208 9880
    rafael.sayagues@cr.ey.com
  • Alexandre Barbellion
    +506 2208 9800
    alexandre.barbellion@cr.ey.com
Ernst & Young LLP, Latin American Business Center, Houston
  • Priscila Maya
    +1 713 750 8698
    priscila.maya@ey.com

EYG no. CM3909