Panama: Tax Transparency Notice

What the client is asked to certify

At onboarding, the client and every controlling person behind it certify each jurisdiction of tax residence and the taxpayer reference issued there. The certification is read against the rest of the file, and a correspondence address, a settlement account or a place of birth pointing somewhere else has to be reconciled before the account opens. A client tells the firm within 30 days of a change in its residence, and the Panama entity requests a fresh certification whenever a change of circumstances shows up in the file. A mandate does not open on an unresolved certification, and a certification that cannot be reconciled closes the account.

What is reported, and to whom

Where an entity in the network is a reporting financial institution, it reports the accounts of clients resident in participating jurisdictions to its own competent authority, which forwards the data to the authority of the client's residence. What is reported is the account holder, the controlling persons, the account identifier, the balance at the year end and the gross amounts credited during the year. Reporting is annual and runs to the deadline the local authority sets. A client may ask IGUAKO Capital (Panamá) S.A. for a copy of what was reported about it, and the copy is provided.

The local charge to tax

Each domicile has its own charge to tax, its own filing calendar and its own reporting obligations, and the group tax function keeps one return calendar covering all 28.

Panama taxes income on a territorial basis, so the two entities pay the jurisdiction's corporate income tax on income arising in Panama, principally the fees and interest earned on facilities to Panamanian borrowers, and foreign-source income is outside the charge. Interest paid to the Cayman parent on the regional treasury line is subject to local withholding at the rate the law sets, and it is withheld. Latitude Trade Finance (Panamá) S.A. is a reporting financial institution for the automatic exchange of financial account information in respect of its co-lenders and treasury counterparties and reports to the local competent authority by the annual deadline. Each entity files an annual return through its resident agent and pays the annual corporate franchise fee.

Transfer pricing on funding, services and licences between Panama entities and the rest of the group is documented each year and reviewed by the Group Head of Tax before the return is filed, alongside the returns of the other Latin America entities.

What the firm will not do

The firm refuses a mandate whose purpose is to hide ownership, income or residence from an authority entitled to know it. It declines a request to invoice a party other than the one that received the service, to route a payment through an entity with no part in the transaction, or to describe a distribution as something it is not. Contracts with introducers, agents and other associated persons carry a clause forbidding facilitation, a right to ask how the work was done and a right to end the appointment on notice. The firm gives no tax advice, and the team in Panama City says so in writing before the first mandate is signed.

A structure that works only because a tax authority cannot see it is not a structure the firm will build. Where a client wants a view on its own position, the firm asks it to take that advice independently and records on the file that it did so.