Panama
1. Panama was reviewed as part of the 2017/2018 and the 2018/2019 peer reviews. This report is supplementary to those previous reports (OECD, 2019[1]) (OECD, 2018[2]).
2. The first filing obligation for a CbC report in Panama applies to reporting fiscal years commencing on or after 1 January 2018.
Summary of key findings
3. Panama’s implementation of the Action 13 minimum standard meets all the applicable terms of reference (OECD, 2017[3]) relating to the domestic legal and administrative framework, with the exception that:
It is recommended that Panama take steps to implement a penalty regime in order to enforce the timely and accurate filing of CbC reports.
4. Previous peer reviews recommended that Panama take steps to have QCAAs in effect with jurisdictions of the Inclusive Framework which meet the confidentiality, consistency and appropriate use prerequisites and with which Panama has an international exchange of information agreement in effect that allows for the automatic exchange of tax information. These steps have been taken and the recommendation is removed.
5. It is recommended that Panama take steps to implement processes or written procedures to ensure that the exchange of information is conducted in a manner consistent with the terms of reference (OECD, 2017[3]) relating to the exchange of information framework ahead of the first exchanges of information.
6. It is recommended that Panama take steps to ensure that the appropriate use condition is met ahead of the first exchanges of information. This recommendation remains unchanged since the 2017/2018 peer review.
Part A: The domestic legal and administrative framework
7. Panama has legislation in effect which imposes a CbC requirement for fiscal years commencing on or after 1 January 2018.
(a) Parent entity filing obligation
8. Panama has introduced a filing requirement which applies to all Ultimate Parent Entities of MNE Groups above a certain threshold and which inclusion of all constituent entities.
(b) Scope and timing of parent entity filing
9. The filing requirements of MNE Groups in Panama apply for fiscal years commencing on or after 1 January 2018. Filing is required within 12 months after the reporting year end.
(d) Limitation of local filing in case of surrogate filing
11. Panama does not have a requirement for local filing and does not allow surrogate filing.
Part B: The exchange of information framework
(a) Exchange of information framework
15. Previous peer reviews recommended that Panama take steps to have QCAAs in effect with jurisdictions of the Inclusive Framework which meet the confidentiality, consistency and appropriate use prerequisites and with which Panama has an international exchange of information agreement in effect that allows for the automatic exchange of tax information. These steps have been taken and the recommendation is removed.
16. As of 31 March 2020, Panama has 57 bilateral relationships in place for the exchange of CbC reports. Within the context of its international exchange of information agreements that allow automatic exchange of information, Panama has taken steps to have qualifying competent authority agreements in effect with jurisdictions of the Inclusive Framework that meet the confidentiality, consistency and appropriate use conditions. Regarding Panama’s exchange of information framework, no inconsistencies with the terms of reference were identified. 1
(f) Consultation with other Competent Authority before determining systemic failure or significant non-compliance
21. No changes were identified.
Conclusion
24. Previous peer reviews recommended that Panama take steps to have QCAAs in effect with jurisdictions of the Inclusive Framework which meet the confidentiality, consistency and appropriate use prerequisites and with which Panama has an international exchange of information agreement in effect that allows for the automatic exchange of tax information. These steps have been taken and the recommendation is removed.
25. It is recommended that Panama take steps to implement processes or written procedures to ensure that the exchange of information is conducted in a manner consistent with the terms of reference relating to the exchange of information framework ahead of its first exchanges of information. This recommendation remains unchanged since the 2018/2019 peer review.
References
OECD (2019), Country-by-Country Reporting – Compilation of Peer Review Reports (Phase 2): Inclusive Framework on BEPS: Action 13, OECD/G20 Base Erosion and Profit Shifting Project, OECD Publishing, Paris, https://dx.doi.org/10.1787/f9bf1157-en. [1]
OECD (2018), Country-by-Country Reporting – Compilation of Peer Review Reports (Phase 1): Inclusive Framework on BEPS: Action 13, OECD/G20 Base Erosion and Profit Shifting Project, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264300057-en. [2]
OECD (2017), Terms of reference for the conduct of peer review of the Action 13 minimum standard on country-by-country reporting, OECD Publishing, https://www.oecd.org/tax/beps/beps-action-13-on-country-by-country-reporting-peer-review-documents.pdf. [3]
Note
← 1. No inconsistency with the terms of reference will be identified where a QCAA is not in effect with one or more jurisdictions of the Inclusive Framework that meet the confidentiality, consistency and appropriate use conditions, but this is due to circumstances that are not under the control of the reviewed jurisdiction. This may include, for example, where the other jurisdiction intends to exchange CbC reports using the MCAA but it does not have the Convention in effect for the relevant fiscal period, or where the other jurisdiction has declined to have a QCAA in effect with the reviewed jurisdiction.