Panama - Local Requirements – Aibidia

Source:

Fiscal Code of the Republic of Panama, Article 762-I, as modified by Article 2 of Law No. 114 of 2013
Fiscal Code of the Republic of Panama, Article 762-J, as modified by Article 9 of Law No. 52 of 2012
Fiscal Code of the Republic of Panama, Article 762-L, as introduced by Law No. 69 of 2019
Executive Decree No. 390 of 7 November 2016 (Decreto Ejecutivo No. 390), Articles 10 and 11

Summary of local requirements

Strict Format: Not specified

Language: Spanish

To download the legislation in the original language, go to:

Local File

1.	General taxpayer information:
a.	Detail of intra-group operations: amounts and related parties for each type of operation
b.	Tax information of the taxpayer and its related parties residing abroad (name, tax address and tax identification number)
c.	Organizational chart of the taxpayer and the multinational group to which it belongs
d.	Type of relationship with related parties (direct or indirect)
e.	General description of the multinational group (history, products, services, etc.)
f.	Analysis of the industry in which the taxpayer operates
g.	Study of the economic sector in which the taxpayer operates
h.	Key competitors in the industry in which the taxpayer operates
2.	Detailed description of the functions or activities carried out by the taxpayer and related parties residing abroad, insofar as these affect or are affected by the operations between related parties carried out by the taxpayer, including the description of the assets and risks they assume each of said parts
3.	Detailed description of the transactions carried out with related parties residing abroad, including the context in which the transactions were carried out
4.	Information used to determine the valuation of operations between related parties, including a detailed description of the nature, characteristics and amount of its operations with related parties, indicating the valuation method or methods used
5.	Detailed comparability analysis, including any change in the analysis with respect to the previous year
6.	Reasons for acceptance of the related method for each type of operation and detailed explanation of the reasons for rejection of the methods
7.	Selection of the method for each type of operation, to determine the price or profit margins in the operations carried out with its related parties resident abroad, including the criteria and other objective elements to consider that the method is applicable to the operation
8.	Summary of the facts or circumstances taken into consideration for the application of the transfer pricing methodology for each transaction carried out with related parties residing abroad
9.	Financial and tax information used for the analysis of the method selected in the valuation of the operations carried out with its related parties
10.	Detail of the search strategy for comparables, including the quantitative and qualitative criteria for each operation and also the acceptance and rejection matrix
11.	List and description of the independent transactions selected as comparable, internal and external
12.	Public information or audited financial information of the comparables, including the business description
13.	Audited financial statements of the taxpayer for the fiscal period for which it carries out transactions with related parties residing abroad
14.	Segmentation criteria that demonstrate how the financial data used to apply the transfer pricing method is related to the annual financial statements
15.	Segmentation criteria of financial data used for comparables, in the analysis of transfer prices, as well as the sources and dates of obtaining the information
16.	Detailed explanation of the reasons for the use of information from various periods for each transaction carried out with related parties residing abroad
17.	Justification of the use of the comparability adjustments and explanation of their application, detailing whether they were applied to the information of the party under test, the results of the comparables or both, for each transaction carried out with related parties resident in abroad
18.	Justification for the choice of the profitability indicator, depending on the selected method
19.	Detail of the arm's length calculation
20.	Explanation of the reasons to conclude that the transactions with related parties residing abroad were agreed in accordance with the principle of free competition under the selection of the transfer pricing method applied

Recommendations for Local File:

Regarding content requirements:

Tax Identification of Related Parties:

Panama requires the full name or company name, tax domicile, and tax identification number of the taxpayer and of each related party involved in the controlled transactions.

We recommend preparing a supporting document covering all required identifiers for each related party and saving it in the Resources section for attachment to the Local File.
Group Description and Organisational Chart:

Panama requires a general description of the multinational group (history, products, services, etc.) and an organisational chart at the Local File level — not only in the Master File.

We recommend including the group description and organisational chart in the Ownership tab or saving a dedicated group overview document in the Resources section, to ensure this information is explicitly present within the Local File.
Industry and Economic Sector Analysis:

Panama requires both an industry analysis and a separate study of the economic sector in which the taxpayer operates — a more granular requirement than the standard OECD industry overview.

We recommend documenting the industry overview in the Business Description subsection of the Entity Description tab, and preparing a dedicated economic sector study as a supporting document saved in the Resources section.
Priority of Local Comparables:

Panama requires that local (Panamanian) comparables be prioritised before expanding the search to regional or international comparables. This is a specific local rule not reflected in OECD defaults.

We recommend documenting the geographic search sequence — including the rationale for expanding beyond local comparables where no suitable Panamanian comparables were identified — in the Benchmarks & Comparables section and the Map Benchmarks & Comparables tab of the Economic Analysis section.

Regarding format/structural requirements:

Panama does not prescribe a strict standardised template for the Local File. We recommend preparing the Local File using TPDoc's standard Local File functionality. The Local File must be prepared in Spanish.

Master File

1.	Description of the profit-generating aspects of the multinational group
2.	General description of the value chain of the five main products and / or services offered by the multinational group, as well as the description of the geographic markets where it operates
3.	Group financial statements or equivalent report for the last accounting year
4.	List and brief description of the agreements for services between the members of the multinational group that have an impact on the operations with the taxpayer's related parties, including the transfer pricing policy for the allocation of costs, as well as the pricing policy for intragroup services
5.	List of intangibles or group of intangibles of the multinational group that have an impact on the taxpayer's transactions and which related parties maintain legal ownership of them
6.	General description of the transfer pricing policies of the multinational group related to financing and / or leverage agreements between related parties that have an impact on the operations with related parties of the taxpayer
7.	A list of previous transfer pricing agreements concluded by group members related to the transactions in which the taxpayer participates (Advance Pricing Agreements APA)
8.	Detail information on whether the taxpayer has been part of a business restructuring, if it has been affected by a business restructuring process and how the aspects of these transactions affect the taxpayer
9.	Detail if the taxpayer has participated in the transfer of intangibles and include an explanation of how the aspects of those transactions affect the taxpayer
10.	A general description of the nature and value of the related transactions in which the taxpayer participates
11.	A description of the functions, assets and risks of the group companies, insofar as they are affecting the related transactions carried out by the taxpayer

Recommendations for Master File:

Regarding content requirements:

Business Restructurings and Intangible Transfers:

Panama requires not only a group-level description of restructurings and intangible transfers, but also a specific explanation of how those transactions affect the taxpayer. This taxpayer-specific impact analysis goes beyond the standard OECD group-level description.

We recommend documenting the taxpayer-specific impact of any restructuring or intangible transfer in the Business Restructurings section and the Intangible Transfers tab of the Intangible Assets section, clearly distinguishing the group-level description from the entity-level impact narrative.
APAs:

Panama requires a list of advance pricing agreements concluded by group members that are specifically related to the transactions in which the taxpayer participates.

We recommend documenting all relevant APAs in the Rulings section.

Regarding format/structural requirements:

Panama does not prescribe a strict standardised template for the Master File. We recommend preparing the Master File using TPDoc's standard Master File functionality. The Master File must be prepared in Spanish.