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30 October 2018 Panama: Taxpayers with a concession for call center activities are subject to transfer pricing regulations Panama published, in Official Gazette No. 28637-A, Law No. 52 (the Law) (17 October 2018), which contains provisions on the activities that individuals or entities with a call center concession may conduct. The Law also includes provisions on applying transfer pricing regulations to transactions conducted by those entities. The Law establishes that, starting with tax year 2019, the transfer pricing rules will apply to any related-party transaction that an individual or entity conducts with individuals or entities that have a concession to provide call center services. Even though individuals and entities with a concession to provide call center services are exempt from income tax, the transfer pricing rules also will apply to transactions conducted by those individuals or entities with related parties that are: (1) established in Panama; (2) tax residents of other jurisdictions; or (3) established in the Col?n Free Zone. Additionally, the transfer pricing rules will apply if the related parties operate: (1) in the Oil Free Zone (Zona Libre de Petróleo) under Cabinet Decree 36 of 2003; (2) in the Special Economic Area of Panama-Pacifico; (3) under the multinational headquarters regime; (4) under the City of Knowledge regime; or (5) in any other current or future free zones or special economic areas. In all cases, the application of the transfer pricing regulations must accord with the provisions of the Fiscal Code (the Code), except for the provisions of Article 762-D of the Code. Article 762-D of the Code establishes that transactions that a taxpayer conducts with related parties that are tax residents of other jurisdictions are subject to the transfer pricing regulations if those transactions affect the determination of taxable income for income tax purposes, in the tax year in which the transaction is reported or takes place. Ernst & Young Limited Corp., Panama City
Ernst & Young, S.A., San José
Ernst & Young, LLP, Latin America Business Center, New York
Ernst & Young LLP (United Kingdom), Latin American Business Center, London
Ernst & Young Tax Co., Latin America Tax Desk, Japan & Asia Pacific
Document ID: 2018-6264 |
