Transfer pricing, which is the agreed price between companies of the same group, must follow the principle of free competition according to Panamanian regulations.
Transfer Pricing Obligations
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Definition of Related Parties: Related parties are those companies that have direct or indirect influence on each other, including branches and permanent establishments.
Scope of Application: It applies to any transaction between taxpayers and related foreign parties or under special tax regimes, if they affect taxable income or expenses.
Evaluation Methods: Methods such as comparable uncontrolled price, cost plus, and resale price, among others, are used to ensure fair competition.
Information and Documentation: Taxpayers must have adequate documentation on transactions with related parties when filing their tax returns.
Transfer Pricing Study: Executive Decree No. 390 regulates the principle of full competition and came into effect in January 2017.
Information Statement (Form 930): Taxpayers must submit a Transfer Pricing Information Statement within six months after the close of the analyzed fiscal year.
Sanctioning Regime: Non-compliance entails a fine of 1% of the total transactions with related parties, with a maximum limit of one million balboas.
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