Panama Corporate Accounting Regulations
All companies operating in Panama are required by law to maintain accounting records according to generally accepted accounting principles (GAAP) in the Republic of Panama, i.e. International Financial Reporting Standards (IFRS), or NIIF as per the abbreviation in Spanish.
Panamanian companies operating outside of Panama are also required to maintain accounting records according to GAAP in the Republic of Panama, which they will need to provide to their resident agents every year on April 30th at the latest, in original or copy. The agent has to be informed of the location of these documents.
The accounting records are those documents that indicate the operations of the legal entity, both accounting and financial, and also indicate the assets, liabilities and equity. Their function is to determine the financial situation accurately and thus be the source to prepare financial statements. All accounting records must be maintained in Spanish.
Businesses operating in Panama must maintain a general journal, general ledger, minute book, and stock register (shareholders registry). Businesses in commerce just need to keep a general diary and a general ledger.
Accounting records, supporting documents and correspondence must be kept in Panama, as long as the operations are carried on locally. They must be up to date and ready to be inspected by authorities at any time. Supporting documents are contracts, invoices, receipts, and in general any type of documentation supporting the transactions carried out by the company.
According to Law 280 of December 30th 2021, a certified public accountant must be involved for municipal and national rent declaration when the gross declared amount exceeds US$11,000.
When the accounting records are maintained via technological or electronic means, specific certification from a certified public accountant is also required.
Accounting records must be prepared according to the accrual basis of accounting in accordance with International Financial Accounting Standards (IFAS), with few exceptions. Banking institutions are authorized to maintain their accounting records in accordance with either IFRS or US GAAP.
Panamanian tax laws mandate that all businesses doing business in the country keep their financial statements on file, available to the General Directorate of Revenue (DGI) upon request, and verified by a certified public accountant in compliance with Panama’s widely accepted auditing standards. The financial statements may be registered with the Panamanian Public Registry, but it is not required.
The maintenance of audited financial statements is required for banks, insurance and reinsurance firms, firms registered with the Superintendence of the Securities Market, and firms operating in free zones. Each year, independent external auditors are required to certify the financial statements of these businesses.
Do you have questions about the accounting regulations for businesses in Panama? Contact us and obtain answers. You may also visit our Frequently Asked Questions for answers to common inquiries from our clients.