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Transfer Pricing Obligations

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Transfer Pricing Obligations

Transfer pricing, which is the agreed price between companies of the same group, must follow the principle of free competition according to Panamanian regulations.

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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