25 Oct 2019

Tax Amnesty for Panama Companies and Foundations

Panama has recently approved a new law, Tax Amnesty in Panama Law 99 of 2019 (the “Law”), relating to outstanding fines and penalties payable by Panamanian companies and foundations.

Currently, companies and foundations that do not pay their annual tax of $300 and $400 respectively incur fines and penalties, which over time do add up.

The benefit of the new Law is that it will allow such entities to be reinstated and/or returned to good standing, at a much reduced cost, since it will not be necessary to pay outstanding penalties and fines. Please note that overdue annual taxes will still be payable.

The Law proposes that the amnesty will expire on 28 February 2020 and so there is only a short window to take advantage of this opportunity. It is notable the Law provides that there shall be no further amnesties until 2024.

For overdue annual tax payments made before 30 November 2019 then 100% of the fines and penalties shall be waived. This reduces to 95% for December 2019 payments, 90% for January 2020 payments and 85% for February 2020 payments.

If you have any queries, then please do not hesitate to contact Giselle Ocampo or Lidia Ramos.

22 Oct 2019

BVI – Economic Substance ‘Rules and Explanatory Notes’ Published

On October 9, 2019 the BVI International Tax Authority published the final version of their ‘Rules and Explanatory Notes’ (the “Rules”) on Economic Substance. The Rules replace the draft BVI Economic Substance Code (the “Code”). The Rules provide very important guidance and explanatory notes to assist with the interpretation of the Economic Substance (Companies and Limited Partnerships) Act 2018 (“ESA”) that was passed into law in December 2018. The Rules contain limited material changes from the draft Code, with the majority of the guidance provided within the draft Code remaining consistent in the Rules.

Now that the ‘Rules and Explanatory Notes’ are issued, we strongly recommend that all companies take immediate steps to ensure their entities are correctly classified.

As a reminder, the reporting periods as they relate to existing and newly registered BVI companies are now in effect.

It should be noted however that whilst the Rules are now finalised, they will not become effective until a further amendment to the BVI’s Beneficial Ownership Secure System Act comes into effect. This amendment, which is already anticipated by the Rules, is expected to be passed and become effective very shortly.

For assistance with classification please contact us at enquiries@hatstone.com.