Starting Entrepreneurship and Invoicing in Panama: A Complete Guide

Starting a company in Panama involves key fiscal responsibilities, including the correct issuance of invoices. In Panama, the law requires that all business operations be supported by official documents, either through fiscal equipment or the Electronic Invoicing system. Here's how to determine your billing obligation and which system is right for your business.

Can I bill with tax equipment or do I need to use the Panama Electronic Billing System?

If you are starting a business and you need to start invoicing, the right thing to do is to work with electronic invoicing. All businesses (operating in a personal or legal capacity) that began operations starting from January 1, 2022, must use the Panamanian Electronic Billing System as a means of invoicing.

Can I choose the free billing method or do I need to hire the service of a PAC?

The choice between the free billing method and contracting a PAC depends on certain parameters established by the Directorate General of Revenue (DGI). Here are the annual gross income limits and the number of monthly documents allowed:

Natural and Legal Persons:

• Until B/. 36,000.00: The number of monthly documents allowed is unlimited (including credit notes).
• From B/. 36,000.01 to B/. 1,000,000.00: The number of monthly documents allowed is up to 500.

All individuals, individuals or legal entities, who exceed the above-mentioned parameters, must use the Electronic Billing method by hiring a Qualified Authorized Provider.

I've heard that there are exceptions for the use of the Tax Team and the Electronic Billing System. How do I know if I can apply for this benefit?

Excepted are those small merchants or service providers whose monthly revenues do not exceed B/. 3,000.00 or B/.36,000.00 per year. There are also a number of activities that are excluded, either because of the type of business or because they are in hard-to-reach locations.

In the same way, according to the Law 256 of November 26, 2021 are excluded from the use of authorized Tax Equipment and the Electronic Invoicing System:

• Agricultural activity whose annual gross taxable income is less than three hundred and fifty thousand balboa (B/. 350,000.00)
• The transfer of immovable property and those movable assets that must be or are contained in public deeds.
• The services provided under the dependency relationship in accordance with the Labor Code.
• Natural or legal persons who carry out the activities of selling products or services through street vendors who do not use motor vehicles.
• The activities of co-owner associations related to the collection of maintenance fees to comply with the Horizontal Property Regime.
• The activities of commission agents that correspond to reimbursable expenses, in which case they may be documented by means of non-fiscal vouchers. The Directorate General of Revenue will regulate this provision.
• Non-profit entities, associations or unions in the country, provided that they are duly authorized to receive deductible donations by the General Directorate of Revenue.
• Elective ground transportation services, meaning taxis. The Transit and Ground Transportation Authority will issue the corresponding certificate.
• Any other activity that, due to its nature, in the opinion of the Directorate General of Revenue, should be exempt from the use of authorized tax and electronic invoicing equipment; however, this Directorate may request information necessary to control the obligation to document its operations.

The above-mentioned exempt activities must be documented through invoices or equivalent documents authorized by the Directorate General of Revenue to document any transaction related to the transfer, sale of goods and provision of services.

However, the Directorate General of Revenue established through the Resolution 201-0418 of January 18, 2024, March 1, 2024 as the single expiration date for those previously granted tax equipment exception certifications that do not have an expiration date. As of the expiration date of this certification, the taxpayer must migrate to the Electronic Billing System.

In conclusion, if you are starting a company and want to comply with tax regulations, you must have an Electronic Invoicer either using the free system offered by the DGI or through a PAC. If you have any questions or want to start the process and you don't know how to do it, contact us. We're here to help.

Sources:

https://dgi.mef.gob.pa/Facturacion/LEEF.php

Law No. 76 of December 22, 1976

Act No. 256 of November 26, 2021

Resolution 201-9775 of October 20, 2023

Resolution 201-0418 of January 18, 2024