Economic Substance in Panama: What Multinational Groups Must Know | EDTIJ<\/title>\n<meta name=\"description\" content=\"Panama introduces economic substance requirements for passive income for the first time. 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}\n .step { grid-template-columns: 40px 1fr; }\n }\n<\/style>\n<\/head>\n<body>\n\n\n<div class=\"top-bar\">\n <span class=\"top-bar-left\">EDTIJ — Corporate & Tax Law<\/span>\n <div class=\"lang-switcher\">\n <a href=\"https:\/\/www.edtij.com\/sustancia-economica-panama-grupos-multinacionales\">ES<\/a>\n <a href=\"#\" class=\"active\">EN<\/a>\n <\/div>\n<\/div>\n\n<div class=\"article-wrap\">\n\n \n <header class=\"article-header\">\n <div class=\"article-label\">International Taxation — Risks & Contingencies<\/div>\n <h1 class=\"article-title\">Economic Substance in Panama: What Multinational Groups Must Know Before the Law Takes Effect<\/h1>\n <p class=\"article-subtitle\">The Fiscal Code reform bill introduces, for the first time, a condition on Panama’s territoriality principle. Its impact on holdings, licensing platforms, and investment vehicles is immediate.<\/p>\n <div class=\"article-meta\">\n <span>EDTIJ<\/span>\n <span class=\"sep\">·<\/span>\n <span>May 2026<\/span>\n <span class=\"sep\">·<\/span>\n <span>By <strong>Marisel Della Togna<\/strong><\/span>\n <span class=\"sep\">·<\/span>\n <a href=\"https:\/\/www.edtij.com\/sustancia-economica-panama-grupos-multinacionales\">Leer en español<\/a>\n <\/div>\n <\/header>\n\n \n <div class=\"article-body\">\n\n <div class=\"section-label\">I<\/div>\n <h2 class=\"section-title\">Introduction<\/h2>\n\n <p>Panama is facing a structural transformation in its corporate taxation model. The Fiscal Code reform bill submitted by the Ministry of Economy and Finance introduces, for the first time in the country’s legislative history, economic substance requirements for entities generating passive income from foreign sources.<\/p>\n\n <p>This reform is not a minor technical amendment. It introduces a new condition that Panama’s tax system imposes on structures that have historically operated with full legitimacy under the territoriality principle. Understanding its scope, implications, and timeline is essential for any multinational group with a presence in Panama.<\/p>\n\n <div class=\"callout\">\n <p>Panama’s territoriality principle does not disappear under this reform. But it becomes conditional. And that distinction has a direct impact on thousands of currently active structures.<\/p>\n <\/div>\n\n <div class=\"section-label\">II<\/div>\n <h2 class=\"section-title\">What Does the Bill Propose?<\/h2>\n\n <p>The bill introduces a new Chapter I-A into the Fiscal Code under which entities receiving certain types of passive income from foreign sources must demonstrate genuine economic substance in Panama to maintain the favorable tax treatment currently applicable to that income.<\/p>\n\n <p>The income categories covered include dividends, interest, royalties and other intellectual property rights, capital gains, and income from real estate. Entities that fail to demonstrate sufficient economic substance will be classified as <em>non-qualified entities<\/em> and will be subject to a <strong>15% tax on gross income<\/strong>.<\/p>\n\n <div class=\"section-label\">III<\/div>\n <h2 class=\"section-title\">What Constitutes Economic Substance?<\/h2>\n\n <p>The bill establishes that a qualified entity must concurrently demonstrate the following elements:<\/p>\n\n <div class=\"table-wrap\">\n <table>\n <thead>\n <tr>\n <th style=\"width:34%\">Element<\/th>\n <th>Description<\/th>\n <\/tr>\n <\/thead>\n <tbody>\n <tr>\n <td>Qualified personnel<\/td>\n <td>Employees or directors with adequate knowledge and compensation commensurate with their functions in Panama.<\/td>\n <\/tr>\n <tr>\n <td>Physical facilities<\/td>\n <td>Offices or physical spaces appropriate for the type of activity carried out.<\/td>\n <\/tr>\n <tr>\n <td>Strategic decision-making<\/td>\n <td>Key management decisions must be made within Panamanian territory.<\/td>\n <\/tr>\n <tr>\n <td>Linked operating costs<\/td>\n <td>Operating expenses must bear a reasonable relationship to the income generated.<\/td>\n <\/tr>\n <tr>\n <td>Annual reporting<\/td>\n <td>Entities must submit an annual economic substance report to the competent authorities.<\/td>\n <\/tr>\n <\/tbody>\n <\/table>\n <\/div>\n\n <div class=\"note-box\">\n <div class=\"note-box-label\">Technical Note<\/div>\n <p>The rule does not establish fixed numerical thresholds. The assessment will be qualitative and proportional to the nature and volume of each entity’s activity. This margin of discretion makes preventive legal counsel particularly relevant.<\/p>\n <\/div>\n\n <div class=\"section-label\">IV<\/div>\n <h2 class=\"section-title\">Who Is Affected and Who Is Not?<\/h2>\n\n <p>The bill directly affects legal entities incorporated in Panama or with Panamanian tax residence that receive passive income from foreign sources without demonstrating sufficient economic substance. Among the structures that warrant particular attention:<\/p>\n\n <div class=\"table-wrap\">\n <table>\n <thead>\n <tr>\n <th style=\"width:62%\">Structure Type<\/th>\n <th>Exposure Level<\/th>\n <\/tr>\n <\/thead>\n <tbody>\n <tr>\n <td>Family holdings receiving dividends from foreign subsidiaries<\/td>\n <td><span class=\"badge badge-high\">High<\/span><\/td>\n <\/tr>\n <tr>\n <td>Companies holding intellectual property licensed to regional group<\/td>\n <td><span class=\"badge badge-high\">High<\/span><\/td>\n <\/tr>\n <tr>\n <td>Passive investment vehicles (equities, bonds, funds)<\/td>\n <td><span class=\"badge badge-high\">High<\/span><\/td>\n <\/tr>\n <tr>\n <td>Multinational groups with headquarters or co-headquarters in Panama<\/td>\n <td><span class=\"badge badge-med\">Medium-high<\/span><\/td>\n <\/tr>\n <tr>\n <td>SEM and EMMA entities with mixed activities (operational + passive)<\/td>\n <td><span class=\"badge badge-med\">Medium<\/span><\/td>\n <\/tr>\n <tr>\n <td>Entities with operational activities already reported to supervisory bodies<\/td>\n <td><span class=\"badge badge-low\">Low \u2014 subject to analysis<\/span><\/td>\n <\/tr>\n <\/tbody>\n <\/table>\n <\/div>\n\n <div class=\"callout\">\n <p>Existing special regimes \u2014 SEM, Colon Free Zone, Panama Pacifico \u2014 have their own economic presence requirements. It is necessary to analyze whether these requirements also satisfy the new economic substance test or whether additional documentation will be required.<\/p>\n <\/div>\n\n <div class=\"section-label\">V<\/div>\n <h2 class=\"section-title\">Concrete Tax Implications<\/h2>\n\n <p>For entities classified as non-qualified, the most immediate impact is the application of a 15% tax on gross passive income. This rate is consistent with the global minimum tax established under Pillar Two of the OECD\/G20 framework.<\/p>\n\n <p>However, its application to gross rather than net income may be significantly more burdensome for structures with low net margins, such as certain intercompany financing vehicles or pass-through investment funds.<\/p>\n\n <p>Additionally, the bill expands the criteria for determining when a foreign company has a permanent establishment in Panama, which may create additional tax obligations for groups currently operating through dependent representatives or employees authorized to conclude contracts.<\/p>\n\n <div class=\"section-label\">VI<\/div>\n <h2 class=\"section-title\">The Time Factor: Why Act Now<\/h2>\n\n <p>The Government of Panama has communicated that <strong>June 2026<\/strong> is the critical deadline for this law to be enacted. The objective is for Panama to receive a favorable assessment from the European Union in October 2026 and be removed from its list of non-cooperative jurisdictions.<\/p>\n\n <p>This means the window for preventive planning is limited. Structures that need to be reinforced, reorganized, or documented require time to implement changes in a genuine and sustainable manner.<\/p>\n\n <div class=\"steps\">\n <div class=\"step\">\n <div class=\"step-num\">1<\/div>\n <div class=\"step-content\">\n <div class=\"step-title\">Legal Diagnosis<\/div>\n <p>Identify which entities in Panama receive passive income from foreign sources and under which category.<\/p>\n <\/div>\n <\/div>\n <div class=\"step\">\n <div class=\"step-num\">2<\/div>\n <div class=\"step-content\">\n <div class=\"step-title\">Existing Substance Assessment<\/div>\n <p>Review which substance elements your structure already has and identify specific gaps.<\/p>\n <\/div>\n <\/div>\n <div class=\"step\">\n <div class=\"step-num\">3<\/div>\n <div class=\"step-content\">\n <div class=\"step-title\">Reinforcement Plan Design<\/div>\n <p>Define what needs to be implemented: personnel, office space, board minutes protocol, operating cost policy.<\/p>\n <\/div>\n <\/div>\n <div class=\"step\">\n <div class=\"step-num\">4<\/div>\n <div class=\"step-content\">\n <div class=\"step-title\">Documented Implementation<\/div>\n <p>Execute changes and document them from day one. All evidence counts in a future inspection.<\/p>\n <\/div>\n <\/div>\n <div class=\"step\">\n <div class=\"step-num\">5<\/div>\n <div class=\"step-content\">\n <div class=\"step-title\">Annual Report Preparation<\/div>\n <p>Anticipate the new reporting obligation and be ready from the first applicable fiscal period.<\/p>\n <\/div>\n <\/div>\n <\/div>\n\n <div class=\"section-label\">VII<\/div>\n <h2 class=\"section-title\">Questions the Legislative Debate Must Still Answer<\/h2>\n\n <p>At the time of writing, the bill remains under discussion in the National Assembly. Several points require clarification in the final text:<\/p>\n\n <div class=\"questions-block\">\n <div class=\"questions-block-label\">Legal Certainty Questions<\/div>\n <ul>\n <li>How does the new rule interact with existing regulated special regimes \u2014 SEM, EMMA \u2014 that already have their own substance requirements and report to their regulatory bodies? Will dual compliance burdens arise?<\/li>\n <li>Is the 15% on gross income the final and only tax, or can it accumulate with dividend taxes and other levies?<\/li>\n <li>What will the qualified personnel threshold be for a holding structure that, by its nature, does not require intensive operations?<\/li>\n <li>What will the mechanism and recipient authority for the annual substance report be?<\/li>\n <li>Will there be a transition or grace period for adapting existing structures before the rule takes full effect?<\/li>\n <\/ul>\n <\/div>\n\n <p>These are not obstructionist questions. They are questions of legal certainty. The difference between a well-executed reform and one that generates more uncertainty than clarity lies precisely in how they are answered.<\/p>\n\n <\/div>\n\n \n <div class=\"conclusion-block\">\n <div class=\"conclusion-label\">Conclusion<\/div>\n <p>The economic substance reform under debate in Panama is necessary, technically consistent with international standards, and broadly positive for the reputation of Panama’s tax system.<\/p>\n <p>But its impact on currently legitimate and active structures is real. Ignoring it is not a responsible option for any multinational group with a presence in Panama.<\/p>\n <p>At EDTIJ, we are closely monitoring the legislative process. If your structures in Panama generate passive income from foreign sources, we recommend initiating a preventive review with our team before the rule takes effect.<\/p>\n <p>The time to act is not after the rule imposes a tax you did not anticipate.<\/p>\n <div class=\"author-line\">\n <div class=\"author-name\">Marisel Della Togna<\/div>\n <div class=\"author-role\">Partner — Escobar, Della Togna, Icaza & Jurado · <a href=\"https:\/\/www.edtij.com\">www.edtij.com<\/a><\/div>\n <\/div>\n <\/div>\n\n \n <div class=\"seo-footer\">\n <div class=\"seo-footer-label\">Article Information<\/div>\n <p><strong>Target keyword:<\/strong> economic substance Panama multinational groups · <strong>Slug:<\/strong> \/en\/economic-substance-panama-multinational-groups · <strong>Category:<\/strong> International Taxation<\/p>\n <\/div>\n\n<\/div>\n\n<\/body>\n<\/html>\n\n","protected":false},"excerpt":{"rendered":"<p>Economic Substance in Panama: What Multinational Groups Must Know | EDTIJ EDTIJ — Corporate & Tax Law ES EN International Taxation — Risks & Contingencies Economic Substance in Panama: What Multinational Groups Must Know Before the Law Takes Effect The Fiscal Code reform bill introduces, for the first time, a condition on Panama’s territoriality principle. […]<\/p>\n","protected":false},"author":2,"featured_media":3243,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6,7],"tags":[],"class_list":["post-3242","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-article","category-laws"],"yoast_head":"\n<title>Economic Substance in Panama: What Multinational Groups Must Know -<\/title>\n<meta name=\"description\" content=\"Panama's economic substance bill would require genuine local presence for passive income tax benefits \u2014 or a 15% gross income tax. 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}\n  .conclusion-block .author-line { margin-top: 32px; padding-top: 24px; border-top: 1px solid #333; }\n  .conclusion-block .author-name { font-family: 'Playfair Display', Georgia, serif; font-size: 16px; font-weight: 700; color: var(--white); margin-bottom: 2px; }\n  .conclusion-block .author-role { font-family: 'Barlow Condensed', sans-serif; font-size: 12px; letter-spacing: 0.1em; text-transform: uppercase; color: var(--light); }\n  .conclusion-block .author-role a { color: var(--rule); text-decoration: none; }\n  .conclusion-block .author-role a:hover { color: var(--white); }\n\n  .seo-footer { margin-top: 56px; padding-top: 28px; border-top: 1px solid var(--rule); }\n  .seo-footer-label { font-family: 'Barlow Condensed', sans-serif; font-size: 10px; font-weight: 700; letter-spacing: 0.18em; text-transform: uppercase; color: var(--light); margin-bottom: 8px; }\n  .seo-footer p { font-size: 13px; color: var(--light); line-height: 1.6; }\n\n  @media (max-width: 640px) {\n    .top-bar { padding: 10px 16px; flex-direction: column; align-items: flex-start; gap: 8px; }\n    .article-wrap { padding: 0 16px 60px; }\n    .article-header { padding: 40px 0 28px; }\n    .conclusion-block { padding: 36px 24px; }\n    .questions-block { padding: 24px 20px; }\n    .step { grid-template-columns: 40px 1fr; }\n  }\n<\/style>\n<\/head>\n<body>\n\n<!-- TOP BAR -->\n<div class=\"top-bar\">\n  <span class=\"top-bar-left\">EDTIJ — Corporate & Tax Law<\/span>\n  <div class=\"lang-switcher\">\n    <a href=\"https:\/\/www.edtij.com\/sustancia-economica-panama-grupos-multinacionales\">ES<\/a>\n    <a href=\"#\" class=\"active\">EN<\/a>\n  <\/div>\n<\/div>\n\n<div class=\"article-wrap\">\n\n  <!-- HEADER -->\n  <header class=\"article-header\">\n    <div class=\"article-label\">International Taxation — Risks & Contingencies<\/div>\n    <h1 class=\"article-title\">Economic Substance in Panama: What Multinational Groups Must Know Before the Law Takes Effect<\/h1>\n    <p class=\"article-subtitle\">The Fiscal Code reform bill introduces, for the first time, a condition on Panama’s territoriality principle. Its impact on holdings, licensing platforms, and investment vehicles is immediate.<\/p>\n    <div class=\"article-meta\">\n      <span>EDTIJ<\/span>\n      <span class=\"sep\">·<\/span>\n      <span>May 2026<\/span>\n      <span class=\"sep\">·<\/span>\n      <span>By <strong>Marisel Della Togna<\/strong><\/span>\n      <span class=\"sep\">·<\/span>\n      <a href=\"https:\/\/www.edtij.com\/sustancia-economica-panama-grupos-multinacionales\">Leer en español<\/a>\n    <\/div>\n  <\/header>\n\n  <!-- BODY -->\n  <div class=\"article-body\">\n\n    <div class=\"section-label\">I<\/div>\n    <h2 class=\"section-title\">Introduction<\/h2>\n\n    <p>Panama is facing a structural transformation in its corporate taxation model. The Fiscal Code reform bill submitted by the Ministry of Economy and Finance introduces, for the first time in the country’s legislative history, economic substance requirements for entities generating passive income from foreign sources.<\/p>\n\n    <p>This reform is not a minor technical amendment. It introduces a new condition that Panama’s tax system imposes on structures that have historically operated with full legitimacy under the territoriality principle. Understanding its scope, implications, and timeline is essential for any multinational group with a presence in Panama.<\/p>\n\n    <div class=\"callout\">\n      <p>Panama’s territoriality principle does not disappear under this reform. But it becomes conditional. And that distinction has a direct impact on thousands of currently active structures.<\/p>\n    <\/div>\n\n    <div class=\"section-label\">II<\/div>\n    <h2 class=\"section-title\">What Does the Bill Propose?<\/h2>\n\n    <p>The bill introduces a new Chapter I-A into the Fiscal Code under which entities receiving certain types of passive income from foreign sources must demonstrate genuine economic substance in Panama to maintain the favorable tax treatment currently applicable to that income.<\/p>\n\n    <p>The income categories covered include dividends, interest, royalties and other intellectual property rights, capital gains, and income from real estate. Entities that fail to demonstrate sufficient economic substance will be classified as <em>non-qualified entities<\/em> and will be subject to a <strong>15% tax on gross income<\/strong>.<\/p>\n\n    <div class=\"section-label\">III<\/div>\n    <h2 class=\"section-title\">What Constitutes Economic Substance?<\/h2>\n\n    <p>The bill establishes that a qualified entity must concurrently demonstrate the following elements:<\/p>\n\n    <div class=\"table-wrap\">\n      <table>\n        <thead>\n          <tr>\n            <th style=\"width:34%\">Element<\/th>\n            <th>Description<\/th>\n          <\/tr>\n        <\/thead>\n        <tbody>\n          <tr>\n            <td>Qualified personnel<\/td>\n            <td>Employees or directors with adequate knowledge and compensation commensurate with their functions in Panama.<\/td>\n          <\/tr>\n          <tr>\n            <td>Physical facilities<\/td>\n            <td>Offices or physical spaces appropriate for the type of activity carried out.<\/td>\n          <\/tr>\n          <tr>\n            <td>Strategic decision-making<\/td>\n            <td>Key management decisions must be made within Panamanian territory.<\/td>\n          <\/tr>\n          <tr>\n            <td>Linked operating costs<\/td>\n            <td>Operating expenses must bear a reasonable relationship to the income generated.<\/td>\n          <\/tr>\n          <tr>\n            <td>Annual reporting<\/td>\n            <td>Entities must submit an annual economic substance report to the competent authorities.<\/td>\n          <\/tr>\n        <\/tbody>\n      <\/table>\n    <\/div>\n\n    <div class=\"note-box\">\n      <div class=\"note-box-label\">Technical Note<\/div>\n      <p>The rule does not establish fixed numerical thresholds. The assessment will be qualitative and proportional to the nature and volume of each entity’s activity. This margin of discretion makes preventive legal counsel particularly relevant.<\/p>\n    <\/div>\n\n    <div class=\"section-label\">IV<\/div>\n    <h2 class=\"section-title\">Who Is Affected and Who Is Not?<\/h2>\n\n    <p>The bill directly affects legal entities incorporated in Panama or with Panamanian tax residence that receive passive income from foreign sources without demonstrating sufficient economic substance. Among the structures that warrant particular attention:<\/p>\n\n    <div class=\"table-wrap\">\n      <table>\n        <thead>\n          <tr>\n            <th style=\"width:62%\">Structure Type<\/th>\n            <th>Exposure Level<\/th>\n          <\/tr>\n        <\/thead>\n        <tbody>\n          <tr>\n            <td>Family holdings receiving dividends from foreign subsidiaries<\/td>\n            <td><span class=\"badge badge-high\">High<\/span><\/td>\n          <\/tr>\n          <tr>\n            <td>Companies holding intellectual property licensed to regional group<\/td>\n            <td><span class=\"badge badge-high\">High<\/span><\/td>\n          <\/tr>\n          <tr>\n            <td>Passive investment vehicles (equities, bonds, funds)<\/td>\n            <td><span class=\"badge badge-high\">High<\/span><\/td>\n          <\/tr>\n          <tr>\n            <td>Multinational groups with headquarters or co-headquarters in Panama<\/td>\n            <td><span class=\"badge badge-med\">Medium-high<\/span><\/td>\n          <\/tr>\n          <tr>\n            <td>SEM and EMMA entities with mixed activities (operational + passive)<\/td>\n            <td><span class=\"badge badge-med\">Medium<\/span><\/td>\n          <\/tr>\n          <tr>\n            <td>Entities with operational activities already reported to supervisory bodies<\/td>\n            <td><span class=\"badge badge-low\">Low \u2014 subject to analysis<\/span><\/td>\n          <\/tr>\n        <\/tbody>\n      <\/table>\n    <\/div>\n\n    <div class=\"callout\">\n      <p>Existing special regimes \u2014 SEM, Colon Free Zone, Panama Pacifico \u2014 have their own economic presence requirements. It is necessary to analyze whether these requirements also satisfy the new economic substance test or whether additional documentation will be required.<\/p>\n    <\/div>\n\n    <div class=\"section-label\">V<\/div>\n    <h2 class=\"section-title\">Concrete Tax Implications<\/h2>\n\n    <p>For entities classified as non-qualified, the most immediate impact is the application of a 15% tax on gross passive income. This rate is consistent with the global minimum tax established under Pillar Two of the OECD\/G20 framework.<\/p>\n\n    <p>However, its application to gross rather than net income may be significantly more burdensome for structures with low net margins, such as certain intercompany financing vehicles or pass-through investment funds.<\/p>\n\n    <p>Additionally, the bill expands the criteria for determining when a foreign company has a permanent establishment in Panama, which may create additional tax obligations for groups currently operating through dependent representatives or employees authorized to conclude contracts.<\/p>\n\n    <div class=\"section-label\">VI<\/div>\n    <h2 class=\"section-title\">The Time Factor: Why Act Now<\/h2>\n\n    <p>The Government of Panama has communicated that <strong>June 2026<\/strong> is the critical deadline for this law to be enacted. The objective is for Panama to receive a favorable assessment from the European Union in October 2026 and be removed from its list of non-cooperative jurisdictions.<\/p>\n\n    <p>This means the window for preventive planning is limited. Structures that need to be reinforced, reorganized, or documented require time to implement changes in a genuine and sustainable manner.<\/p>\n\n    <div class=\"steps\">\n      <div class=\"step\">\n        <div class=\"step-num\">1<\/div>\n        <div class=\"step-content\">\n          <div class=\"step-title\">Legal Diagnosis<\/div>\n          <p>Identify which entities in Panama receive passive income from foreign sources and under which category.<\/p>\n        <\/div>\n      <\/div>\n      <div class=\"step\">\n        <div class=\"step-num\">2<\/div>\n        <div class=\"step-content\">\n          <div class=\"step-title\">Existing Substance Assessment<\/div>\n          <p>Review which substance elements your structure already has and identify specific gaps.<\/p>\n        <\/div>\n      <\/div>\n      <div class=\"step\">\n        <div class=\"step-num\">3<\/div>\n        <div class=\"step-content\">\n          <div class=\"step-title\">Reinforcement Plan Design<\/div>\n          <p>Define what needs to be implemented: personnel, office space, board minutes protocol, operating cost policy.<\/p>\n        <\/div>\n      <\/div>\n      <div class=\"step\">\n        <div class=\"step-num\">4<\/div>\n        <div class=\"step-content\">\n          <div class=\"step-title\">Documented Implementation<\/div>\n          <p>Execute changes and document them from day one. All evidence counts in a future inspection.<\/p>\n        <\/div>\n      <\/div>\n      <div class=\"step\">\n        <div class=\"step-num\">5<\/div>\n        <div class=\"step-content\">\n          <div class=\"step-title\">Annual Report Preparation<\/div>\n          <p>Anticipate the new reporting obligation and be ready from the first applicable fiscal period.<\/p>\n        <\/div>\n      <\/div>\n    <\/div>\n\n    <div class=\"section-label\">VII<\/div>\n    <h2 class=\"section-title\">Questions the Legislative Debate Must Still Answer<\/h2>\n\n    <p>At the time of writing, the bill remains under discussion in the National Assembly. Several points require clarification in the final text:<\/p>\n\n    <div class=\"questions-block\">\n      <div class=\"questions-block-label\">Legal Certainty Questions<\/div>\n      <ul>\n        <li>How does the new rule interact with existing regulated special regimes \u2014 SEM, EMMA \u2014 that already have their own substance requirements and report to their regulatory bodies? Will dual compliance burdens arise?<\/li>\n        <li>Is the 15% on gross income the final and only tax, or can it accumulate with dividend taxes and other levies?<\/li>\n        <li>What will the qualified personnel threshold be for a holding structure that, by its nature, does not require intensive operations?<\/li>\n        <li>What will the mechanism and recipient authority for the annual substance report be?<\/li>\n        <li>Will there be a transition or grace period for adapting existing structures before the rule takes full effect?<\/li>\n      <\/ul>\n    <\/div>\n\n    <p>These are not obstructionist questions. They are questions of legal certainty. The difference between a well-executed reform and one that generates more uncertainty than clarity lies precisely in how they are answered.<\/p>\n\n  <\/div><!-- \/article-body -->\n\n  <!-- CONCLUSION -->\n  <div class=\"conclusion-block\">\n    <div class=\"conclusion-label\">Conclusion<\/div>\n    <p>The economic substance reform under debate in Panama is necessary, technically consistent with international standards, and broadly positive for the reputation of Panama’s tax system.<\/p>\n    <p>But its impact on currently legitimate and active structures is real. Ignoring it is not a responsible option for any multinational group with a presence in Panama.<\/p>\n    <p>At EDTIJ, we are closely monitoring the legislative process. If your structures in Panama generate passive income from foreign sources, we recommend initiating a preventive review with our team before the rule takes effect.<\/p>\n    <p>The time to act is not after the rule imposes a tax you did not anticipate.<\/p>\n    <div class=\"author-line\">\n      <div class=\"author-name\">Marisel Della Togna<\/div>\n      <div class=\"author-role\">Partner — Escobar, Della Togna, Icaza & Jurado · <a href=\"https:\/\/www.edtij.com\">www.edtij.com<\/a><\/div>\n    <\/div>\n  <\/div>\n\n  <!-- SEO FOOTER -->\n  <div class=\"seo-footer\">\n    <div class=\"seo-footer-label\">Article Information<\/div>\n    <p><strong>Target keyword:<\/strong> economic substance Panama multinational groups  ·  <strong>Slug:<\/strong> \/en\/economic-substance-panama-multinational-groups  ·  <strong>Category:<\/strong> International Taxation<\/p>\n  <\/div>\n\n<\/div><!-- \/article-wrap -->\n\n<\/body>\n<\/html>\n\n","protected":false},"excerpt":{"rendered":"<p>Economic Substance in Panama: What Multinational Groups Must Know | EDTIJ EDTIJ — Corporate & Tax Law ES EN International Taxation — Risks & Contingencies Economic Substance in Panama: What Multinational Groups Must Know Before the Law Takes Effect The Fiscal Code reform bill introduces, for the first time, a condition on Panama’s territoriality principle. […]<\/p>\n","protected":false},"author":2,"featured_media":3243,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6,7],"tags":[],"class_list":["post-3242","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-article","category-laws"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Economic Substance in Panama: What Multinational Groups Must Know -<\/title>\n<meta name=\"description\" content=\"Panama's economic substance bill would require genuine local presence for passive income tax benefits \u2014 or a 15% gross income tax. 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