Economic Substance in Panama: The Two Tiers Under Executive Decree 32
Executive Decree No. 32 implementing Law 526 does not hold every entity to the same standard. We explain the two tiers of economic substance in Panama — reduced and complete — the 15% penalty for non-qualifying entities, and what to review before fiscal year 2027.
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Panama Regulates Law 526: How Companies Must Demonstrate Economic Substance
Executive Decree No. 32 of 2026 regulates Law 526 on economic substance for passive income. We explain the five criteria covering personnel, facilities, decision-making, expenses and documentation that multinational group entities must meet from fiscal year 2027, and the 15% rate applied when they fall short.
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The Family Protocol: What It Must Contain and How It Protects Your Business Across Generations
Most family businesses don’t survive to the third generation. The reason is almost never a lack of talent — it’s the absence of clear rules about who leads, how decisions get made, and what role each family member plays.
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SHAREHOLDERS AGREEMENTS IN PANAMA: WHAT IT MUST CONTAIN AND HOW TO FORMALIZE IT
Panama’s sociedad anónima is minimalist by design. The pacto social doesn’t resolve what happens when shareholders disagree — that’s the role of a different document: private, and too often missing.
Continue Reading Ultimate Beneficial Owner Transparency: Obligations and Responsibilities in Panama
The term “ultimate beneficial owner” comes up often, but it is not always clear who must report it, how frequently, or what legal responsibility comes with keeping it current. Understanding these elements precisely is now a basic condition for operating any corporate structure in Panama with confidence.
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Panama’s Law 526: The Three Economic Substance Requirements
The law is clear in its structure. What remains to be defined is its practical interpretation — and that is precisely where companies need to prepare with information, not assumptions.
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Passive foreign-source income under Law 526: which categories apply to your structure?
The law does not apply to all income generated by a Panamanian entity. The second threshold is the type of income — and that analysis must come before the substance analysis.
Continue ReadingPrivate Interest Foundations and Law 526: What the Family Office Client Needs to Know
Law 526 changed Panama’s tax landscape, but it did not eliminate patrimonial planning tools. The Private Interest Foundation remains valid — when you understand its position in the new framework.
Continue ReadingPanama’s Economic Substance Law: What Your Business Needs to Know
A fundamental reform that changes the rules for multinational groups in Panama — and that is already in force.
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Economic Substance in Panama: What Bill 641 Means for Your Company
On May 21, Panama’s National Assembly Committee on Economy and Finance approved Bill 641 on first debate. The bill establishes an economic substance regime for passive income of foreign source earned by entities domiciled in Panama. The full Assembly has until June 5 to pass it into law.
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