Panama Country Report

Business Opportunities
October 4, 2021 - Mendoza & Asociados

This article is a contribution to the International Accounting Bulletin (IAB) Panama survey by PrimeGlobal member firm Mendoza & Asociados, and it was published in IAB's September 2021 newsletter. Please read the full article below and reach out to Maycquel Mendoza, Managing and Founding Partner, regarding any questions in relation to the article and doing business in Panama. 

How would you describe the health of the accounting industry in Panama terms of customer demand, fee pressure, and staff recruitment and retention? 

The health of the industry was good before the COVID-19 pandemic, however, due to the economic impact of the extensive quarantine, many companies have had to reduce human resources and have mainly dispensed with accounting staff. Currently, there is a draft law to amend the current laws relating to accounting, and among the main changes proposed is the establishment of fees for different services.

Have there been any significant regulatory developments in Panama over the last 12 months?

In matters related to the accounting profession, there have been no changes; the full International Financial Reporting Standards (IFRS) and the IFRS for Small and Medium-sized Enterprises (SMEs) remain in force as accounting principles.

In tax matters, there have been some changes to note:

  • Electronic invoicing was established as a requirement for companies as of June 2021; however, the General Directorate of Revenues (DGI) has established a voluntary implementation period until the end of the year.
  • Resolutions have been issued modifying the capital gains form to apply the benefits of double taxation avoidance treaties.
  • Due to the impact of the COVID-19 pandemic, some tax benefits were established for SMEs, investments in the sports industry, and limited liability companies.
  • Laws and regulations regarding tourism incentives have been modified.
  • Other regulations have been given regarding ITBMS (value added tax) withholding agents.
Are there any services areas where demand has grown over the last 12 months?

The outsourcing of accounting services has increased because many companies have closed their in-house accounting departments.

Has there been any significant consolidation or merger activity in the accounting profession?

Not to date.

Has the precautionary credit line helped to mitigate risks and boost investor confidence?

There have been no risk situations potentially affecting our business.

What are your expectations for the next twelve months - are there any potentially significant developments in the pipeline?
Is Panama any closer to exiting the Financial Action Task Force (FATF) grey list?

The process of getting off the FATF grey list is at a standstill in Panama.  The agency recently reiterated its decision to keep us on the list because, of the fifteen recommendations made by the FATF, approximately ten have not been fully complied with and there have been no changes in one.

One of the main objections is the lack of compliance and certainty of punishment, as laws and regulations exist but criminal sanctions are not imposed on companies or individuals involved in activities related to money laundering and/or terrorist financing.

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Mendoza & Asociados

Mendoza & Asociados is a firm of Certified Public Accountants, established in the Republic of Panama in 2007. Today, we have 85 employees grouped in different specialties to guide and assist our clients in a comprehensive manner, supported by continuous training in the different branches of our profession and the local and regional regulatory framework, as well as the current fiscal rules. We offer our clients a wide range of services that allow them to obtain concrete results and solutions to contribute to the continuous improvement of their business, supported by the experience, continuous training and commitment of each one of the professionals of our work team.

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