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Master File Submission in Panama

Local and multinational business groups must submit the Master File to taxpayers subject to the Transfer Pricing Regime.
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The obligation to report and document information regarding the corporate group or “master file” of taxpayers subject to the transfer pricing regime is established in art. 762-K of the Panamanian Tax Code and in art. 11 of Decree 390 of 2016.   

The “Master File” is requested by the DGI (Dirección General de Ingresos – Directorate General of Revenue) due to the relevant information regarding the group’s transactions at a global level and its transfer pricing policies. It also provides them with information on profit-generating aspects and a general description of the value chain. 

If the “Master File” is omitted or filed late, a fine ranging from $1,000 to $10,000 will be payable, as well as the likelihood of a possible temporary closing of the establishment according to Art. 756 of the Tax Code. The DGI may immediately request the “Master File” due to the absence of a filing deadline by the Tax Code, otherwise concerning the Transfer Pricing Report and the Transfer Pricing Study. 

The importance of the drafting and review of the documentation of local and multinational groups is not only the compliance with the formal duties of taxpayers but also the mitigation of tax risks. In this regard, taxpayers should verify the documentation is under Decree 390 of 2016. 

In conclusion, the DGI will be able to have a comprehensive view of those transactions that affect the determination of profits of taxpayers subject to the transfer pricing regime. To avoid penalties stipulated in the Tax Code, local and multinational groups will have to review the information contained in the “Master File.” 

Source: Martes Financiero 31/03/22

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