Global Tax Alert (News from Transfer Pricing) | 11 February 2014

Panama amends penalty for noncompliance with transfer pricing return

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Through Law No. 114 of 10 December 2013, Panama amended Section 762-I of the Panamanian Tax Code to establish that the penalty for noncompliance with the transfer pricing information return obligation will not exceed B/.1,000,000.00 (US$1,000,000.00).

Moreover, amended Section 762-I establishes that the tax return will require reporting of the nature of the related party transactions and other relevant information.

Section 762-I requires taxpayers to file an information return on the cross-border transactions conducted with related parties (Informe 930) within six months of the end of the taxpayer's fiscal year.

The information return is an annual obligation, and failure to comply with it results in a penalty of one percent (1%) of the total amount of intercompany transactions. For the penalty calculation, the gross amount of the transactions will be considered regardless of whether the transaction amounts are income, expenses or deductions.

Companies should assess the effect of these rules with the assistance of local tax professionals.

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

Mancera, S.C., Mexico City
  • Jorge Castellón
    +52 55 5283 8671
Ernst & Young, S.A., San José, Costa Rica
  • Rafael Sayagués
    +506 2208 9880
Ernst & Young Limited Corp., Panama City
  • Luis Eduardo Ocando
    +507 208 0144
  • María José Luna
    +507 208 0147

EYG no. CM4172