Executive Decree No. 177 of December 30, 2024

Which regulates Law 52 of October 27, 2016, which establishes the obligation to keep accounting records for certain legal entities and dictates other provisions, amended by Law 254 of November 11, 2021.

Article 1: Purpose. The purpose of this regulation (hereinafter, the "Regulation"), is to develop the obligation of all legal entities constituted in accordance with the laws of the Republic of Panama, to annually record their financial situation, as well as the obligation of custody by resident agents, in accordance with Law 52 of October 27, 2016, as amended by Law 254 of November 11, 2021.

Article 2: Scope. The provisions contained in the Law and in the regulations apply, respectively, to any corporation, limited liability company or any other type of company, as well as to any private interest foundation, constituted in accordance with the laws of the Republic of Panama, which do not carry out operations that are perfected, consummated or have their effects within the Republic of Panama. as well as those that are exclusively dedicated to being holders of assets, inside and/or outside Panamanian territory.

Article 3: Exceptions. The following legal persons are exempt from compliance with the obligations established in the law and in the regulations, respectively, namely:

a) Those who are tax taxpayers in the Republic of Panama.

b) Those that are listed on a recognized local and/or international stock exchange;

(c) Those owned by an international, multilateral or State organization; and

d) Those that are owners or charterers of ships registered exclusively under international service of the Merchant Marine of the Republic of Panama.

Article 4: Panamanian Legal Entity. Legal entities that are exclusively dedicated to being holders of assets inside and/or outside the Republic of Panama, whose final beneficiaries declared to the Superintendence of Non-Financial Subjects (SSNF) are exclusively Panamanian citizens.

In this case, the legal entity must annually submit to its resident agent an affidavit certifying the following, namely:

a) That the legal entity is exclusively dedicated to being a holder of assets inside and/or outside the Republic of Panama; and

b) That the legal entity does not carry out operations or activities that generate taxable income in the Republic of Panama.

The aforementioned affidavit must be signed by a member of the board of directors or the founding council of the legal entity, as applicable, its final beneficiary or a duly authorized representative of the latter.

Notwithstanding the foregoing, those legal entities whose beneficiaries declared to the Superintendence of Non-Financial Subjects (SSNF) are exclusively Panamanian citizens, who generate taxable income outside the Republic of Panama, must annually to their resident agent, any of the following documents:

a) A Financial Statement; or

b) A summary of the elements of its financial institution, the model of which is incorporated into the Regulations, signed by a member of the board of directors or the founding council of the legal entity, as appropriate, its final beneficiary or a duly empowered representative of the latter.

Article 5: Foreign Legal Entity. Legal entities that are exclusively dedicated to being holders of assets inside and/or outside the Republic of Panama and/or that generate income, whose final beneficiaries declared to the Superintendence of Non-Financial Subjects (SSNF), result in at least one foreigner. In this case, the legal entity must annually submit to its resident agent any of the following documents:

(a) A financial statement; or

b) A summary of the elements of its financial institution, the model of which is incorporated into the Regulations, signed by a member of the board of directors or the founding council of the legal entity, as appropriate, its final beneficiary or a duly empowered representative of the latter.

Article 6: Legal Person Without Operations. They are those legal entities that, regardless of whether the final beneficiary declared to the Superintendence of Non-Financial Subjects (SSNF) is Panamanian or foreign, do not carry out any commercial activity, nor do they generate income inside and/or outside the Republic of Panama, nor do they have assets inside and/or outside the Republic of Panama. In this case, the legal entity must annually submit to its resident agent an affidavit certifying the following, namely:

a) That it has not carried out, nor does it carry out any commercial activity, nor does it carry out any type of operations;

b) That they do not have income, nor do they carry out activities that generate income inside and/or outside the Republic of Panama; and

c) That it has no assets inside and/or outside the Republic of Panama.

The aforementioned affidavit must be signed by a member of the board of directors or the founding council of the legal entity, as applicable, its final beneficiary or a duly authorized representative of the latter.