Worldwide transfer pricing reference guide 2014

Panama (continued)
Documentation requirements (continued)
by the taxpayer in its intercompany transactions. In addition, it is necessary to include in the documentation information regarding
functions performed, assets used and risks borne by the taxpayer involved in each transaction. Information and documentation on
comparable transactions or companies by type of transaction must also be included.
Internal comparables should be preferred over external comparables and the reasons for not applying internal comparables must be duly
documented.
The documentation must be prepared considering the complexity and volume of the transactions and should include the information that
the taxpayer used in its evaluation of the intercompany transactions consisting of information pertaining to both the multinational group
to which the taxpayer belongs and the taxpayer itself.
The information of the multinational group contained in the documentation should include:
• A general description of the organizational, legal and operating structure of the group, with any relevant changes
• Identification of the related parties with whom the taxpayer conducts intercompany transactions
• The transfer pricing policy of the multinational group (if any)
Documentation deadlines
Documentation must be readily available by the date on which the transfer pricing information return is due and must be kept along with
the company’s accounting books and records. If requested by the ANIP, documentation should be provided within 45 days of notification.
Taxpayers should file an information return on cross-border intercompany transactions annually, and it should be filed within six months
of the close of the fiscal year.
Statute of limitations on transfer pricing assessments
The statute of limitations on assessments is three years. The term is extended with the filing of an amended return.
Return disclosures/related party disclosures
There are no related party disclosures to be made on general income tax returns.
Transfer pricing-specific returns
An information return (Form 930) on the transactions conducted with related parties resident abroad should be filed within six months of
the close of the fiscal year.
The information return is an annual obligation, and failure to comply with the filing requirement results in a penalty of 1% of the total
amount of intercompany transactions. For the penalty calculation, the gross amount of the transactions will be considered regardless of
their nature; that is, whether they are items of income, expense or deduction.
Frequency of tax audit and transfer pricing scrutiny by the tax authority
The risk of a general tax audit is currently categorized as medium. The risk of a transfer pricing assessment as part of a general tax audit
is low. The ANIP has not yet initiated any tax audits regarding transfer pricing issues, due to the fact that the transfer pricing regulations
are new in the country. However, they have requested transfer pricing documentation from taxpayers that fell under the norm in 2011.
For the last couple of years, the ANIP has worked on the creation of a specialized transfer pricing unit.
In case transfer pricing is scrutinized, the risk that the transfer pricing methodology will be challenged is low.
APA opportunity
Currently, no APA program has been established.
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