If your company is incorporated in Panama, whether it's a corporation, a limited liability company, or a private interest foundation, there is a legal obligation that does not disappear, even if the company has no active operations within the country. Complying with it is not optional.
Since 2016, Panamanian legal frameworks have required these entities to maintain updated accounting records and supporting documentation for their transactions. This obligation, originally established in Law 52 of October 27, 2016, and significantly strengthened by Law 254 of November 11, 2021, applies even to companies that do not perfect or carry out operations within the national territory.
Key Date - April 2026
The Mayor's Office of Panama extended the sworn statement deadline to April 30, 2026. The General Revenue Directorate's (DGI) Tax Calendar also sets April 15 as the deadline for multiple declarations, and April 30 for key taxpayer reports. Don't leave these dates until the last moment.
Law 52 of 2016 – What changed with Law 254 of 2021?
Law 52 of 2016 was enacted to respond to international fiscal transparency standards that Panama committed to fulfilling. Its purpose is to ensure that all legal entities incorporated under Panamanian law have and maintain records that clearly determine their financial situation, assets, liabilities, equity, and commercial operations.
Five years later, Law 254 of 2021 expanded and strengthened that obligation. It incorporated entities that exclusively hold assets—whether within or outside Panamanian territory—and significantly toughened the sanctions regime. Where previously fines for non-compliance were relatively minor, Law 254 established sanctions ranging from B/.5,000.00 to B/.1,000,000.00 for legal entities, and from B/.5,000.00 to B/.100,000.00 for resident agents who fail to comply with their obligations.
More than a technical update, Law 254 represented a clear message from the Panamanian State: compliance with accounting records is a public policy priority, not a low-risk administrative requirement.
Who is obligated?
The obligation applies to any legal entity constituted under the laws of Panama. The law is specific in its scope:
- Corporations
- Limited liability companies
- Private interest foundations
- Any other type of legal entity for commercial purposes, established under Panamanian law
- Legal entities that are exclusively dedicated to holding assets, inside or outside of Panama
A point that often causes confusion: the obligation does not disappear simply because the company has no active operations within Panama. If the entity is incorporated here, it must comply even if all its transactions are carried out in other countries.
Relevant exception:
Entities that already maintain local accounting in Panama because they carry out operations that are perfected within the national territory are subject to the Panamanian Commercial Code, which already establishes this obligation. Law 52 complements this framework for entities that operate outside the country.
What must an accounting record contain under this law?
The law precisely defines what is understood by accounting records: they are data that clearly and precisely indicate the commercial operations of the legal entity, its assets, liabilities, and equity, and that allow for the preparation of financial statements and the determination of its financial situation.
In practical terms, depending on the nature of the entity, the indispensable records are:
- Journal and Ledger for entities conducting commercial activities outside of Panama
- Minutes Book and Shareholder Register for Public Limited Companies
- Record of membership fees or equity contributions for limited liability companies
- Information demonstrating the value of assets and income for asset-holding entities
In addition to accounting records, the law also requires maintaining supporting documentation: contracts, invoices, receipts, and any other document that substantiates the transactions made by the entity. Without that documentation, the accounting records by themselves do not fulfill the legal obligation.
Where should records be kept?
The law is flexible about the location of custody, but strict about availability. Records can be kept at:
- The resident agent's offices within Panama
- Any other place inside or outside of Panama determined by the entity's management bodies
However, when records are kept outside the resident agent's offices, the legal entity has additional obligations: it must report the name and contact details of the custodian, and the physical address where the records are kept, to the resident agent in writing on an annual basis. Furthermore, if the competent authority requests the records, the entity has twenty business days to provide them.
This availability is not a formality. It is an essential condition for compliance.
How long should they be kept?
Accounting records and supporting documentation must be maintained for a minimum period of five years, starting from the last day of the calendar year in which the corresponding transactions were generated. This period applies regardless of whether the company is active, inactive, or in the process of dissolution.
Minimum 5 years of retention from the last recorded transaction
The new obligations
With Law 254 of 2021, the resident agent acquired a more active role and clearer responsibilities. They are obligated to submit an affidavit to the DGI annually by July 15th, containing a list of legal entities for whom they provide services, indicating for each whether the original accounting records are in their offices or elsewhere, and if so, where.
In cases of change of resident agent, the legal entity must provide the new agent with the accounting records before the change is registered in the Public Registry of Panama. This point is critical: the Public Registry will only register the deed of change if the incoming resident agent can prove that they have or have access to the records.
What happens if it isn't fulfilled?
Failure to comply with this obligation has concrete and escalating consequences. Law 254 of 2021 significantly toughened the sanctioning regime:
- Fines to the legal entity from B/.5,000.00 to B/.1,000,000.00 for failure to deliver the required information.
- Fines to the resident agent from B/.5,000.00 to B/.100,000.00 for non-compliance with their obligations under this law
- The DGI can order the Public Registry to suspend the corporate rights of the legal entity.
- In severe cases, the DGI can order the administrative forced liquidation of the entity
A company with suspended corporate rights cannot perform valid legal acts. It cannot sign contracts, open accounts, transfer assets, or record documents with the Public Registry. The practical consequences of reaching that point are considerable.
Dates that cannot be ignored
The April 2026 Tax Calendar published by the General Directorate of Revenue concentrates several highly relevant obligations for Panamanian taxpayers this month. April 15th is the deadline for the Natural Person Income Tax Return with extension, along with multiple ITBMS, ISC, stamps, and insurance declarations. April 30th is the deadline for the Legal Entity Income Tax Return with extension, the Report of Purchases and Imports of Goods and Services, and the Report of Sales and Provision of Services.
This is supplemented by the special extension of the Panama Mayor's Office's Sworn Statement, extended until April 30, 2026, available on the digital platform alcaldiadigital.gob.pa.
In that sense, April is a month with a high tax compliance burden. And proper management of accounting records is precisely what allows you to respond to those requirements with organized, complete, and available information.
What this means for your company: Maintaining accounting records is not just a legal obligation; it's the foundation upon which any company can operate with peace of mind, respond to authority requirements, make informed financial decisions, and protect its legal status. If your company is incorporated in Panama and you are not sure if your records are in order, now is the time to check.
Panama's legal framework regarding accounting records is clear, verifiable, and carries real consequences for non-compliance. Law 52 of 2016, as strengthened by Law 254 of 2021, leaves no room for interpretation: every legal entity incorporated in Panama must have its records in order, available, and preserved for at least five years.
If you manage one or more Panamanian companies (your own or those of clients), checking the compliance status of this obligation is not a minor administrative task. It is a risk management decision.
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