In accordance with Resolution N° 201-1937 (the Resolution) of 2 April 2018, published in the Official Gazette on 9 April 2018, Panama modified Form No. 930 (V1.0), Transfer Pricing Information Return. The new form is Form No. 930 V2.0 (Form 930).

Changes to Form 930 include:

1. The addition of new cells in the main tab of Form 930 related to the adjustments made in the related-party transactions analyses

2. The addition of an "Intangible Annex," for reporting intangible transactions (an Excel file may be uploaded with the information requested in this annex)

3. The addition of a "Comparable Companies Annex," for reporting the name, type, location and country of the comparables, as well as the selected profit level indicator and the financial information of each one of them (an Excel file may be uploaded with the information requested in this annex)

4. A new section with "Questions related to the taxpayer" and "Questions related to the multinational enterprise (MNE)," where some of the questions are related to the information required in Article 11 of Executive Decree 390, published on 24 October 2016 (regarding the Master File)

The "Questions related to the taxpayer" section asks whether the taxpayer:

• Is within a special tax regime or special economic zone
• Has been part of a business restructuring, merger, acquisition or divestment in the reported fiscal period
• Has participated in the transfer of intangibles
• Used adjustments to the comparability for the transactions under analysis
• Used any comparable with operating losses
• Used any comparable with a particular situation, such as a corporate restructuring, merger, acquisition or divestment

The "Questions related to the MNE group" section asks whether:

• The MNE has been part of a business restructuring
• The related parties abroad are encountering any tax disputes relating to transfer pricing with the competent authorities or courts
• The related parties abroad are in the process of being audited or have been subject to a transfer pricing audit

That section also asks for the:

• Ultimate parent entity's country of tax residence
• The last fiscal year available and the MNE group's consolidated amount of revenue for that year, in the currency of the country of tax residence
• Currency that was used to consolidate the income of the MNE group
• Consolidated amount of revenue of the MNE group of the last available period, in US dollars (US$)
• Date of the exchange rate for the currency used to consolidate the income

Form 930 is effective from the date in which the Resolution enters into force (publication in Official Gazette on 9 April 2018) and should be used to report the information corresponding to fiscal year 2018 and subsequent years.

Taxpayers should use Form No. 930 (V1.0) for reporting the information corresponding to fiscal years before 2018.

Form 930 should be submitted online through the tax authorities' (Dirección General de Ingresos or DGI) E-Tax 2.0 System.

The instructions to file Form 930 are published on the DGI website. The Form 930 instructions indicate that no extensions of time or amendments may be requested for Form 930. If the taxpayer files Form 930 before the due date and wishes to make an amendment, however, the taxpayer will have the option of requesting the revocation of Form 930, which will be analyzed and subject to the approval of the DGI. This revocation request must be made through a written memorandum addressed to the Director of the DGI.

The Resolution replaces Resolution No. 201-6845 of 15 June 2012 and Resolution No. 201-162 of 3 January 2013, regarding Form No. 930 (V1.0).

In accordance with the provisions of Article 762-I of the Panamanian Tax Code, failure to comply with the filing of Form 930 may result in a penalty of 1% of the total amount of related-party transactions. For the penalty calculation, the gross amount of the transactions should be included in the penalty calculation, regardless of whether the transaction amounts are income, expenses or deductions. The penalty must not exceed 1 million Balboas (B/.1,000,000).

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CONTACTS

For additional information with respect to this Alert, please contact the following:

Ernst & Young Limited Corp., Panama City

• María José Luna
  maria.luna@pa.ey.com
• Carol Abuchaibe
  carol.abuchaibe@pa.ey.com
• Ronald Pozo
  ronald.pozo@pa.ey.com

Ernst & Young, S.A., San José

• Paul A De Haan
  paul.dehaan@cr.ey.com

Ernst & Young LLP, Latin American Business Center, New York

• Ana Mingramm
  ana.mingramm@ey.com
• Enrique Perez Grovas
  enrique.perezgrovas@ey.com
• Pablo Wejcman
  pablo.wejcman@ey.com

Ernst & Young LLP (United Kingdom), Latin American Business Center, London

• Jose Padilla
  jpadilla@uk.ey.com

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ATTACHMENT

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