Regulatory updates - Panama

The General Directorate of Revenue (DGI) of Panama published a resolution establishing the deadline for implementing the electronic billing system in the country.

According to resolution N°201-0806, taxpayers who provide services of "stock exchange, brokerage houses, investment managers, advisors of investments and price providers" must adopt the Electronic Billing System of Panama – SFEP.

The system implementation timeline for the services mentioned above is 31 August 2023.

As per Decree No. 3, the following operations and services shall implement SFEP as listed below:

• Public transportation services to foreign customers by land, air, or sea means; and public transportation to national customers by air means – starting March 2023;
• General operations and services performed by banks and other financial institutions: first phase – 30 April 2023, second phase – 30 June 2023, and third phase – 31 August 2023;
• Operations performed by the stock exchange (“Bolsa de valores”), operations performed by the insurance sector, and other operations performed by financial institutions – starting 31 August 2023;
• All companies performing operations in Free Zones (“Zonas Francas”) or with special regimes shall start on 30 June 2023.

Panama has also released Resolution No. 201-0717, clarifying the operations and phased timelines for general operations and services performed by banks.

Initially, this group of taxpayers was supposed to start issuing electronic invoices to any public buyer of the state of Panama from 1 November 2022. The new resolution grants a grace period to suppliers dealing with educational centers belonging to the Ministry of Education until 31 March 2023. Starting April 2023, all taxpayers should be issuing exclusively e-invoices to any public contracting entities.

Furthermore, the resolution states that all taxpayers supplying goods and services to the state might also be given an extended deadline to comply with e-invoicing requirements until 31 March 2023. In that case, a request for an exception has to be sent to the corresponding contracting public entity. The authority will answer the request with a note allowing or denying the exception.

The following taxpayers and operations must comply with the regulations starting 2 January 2023:

• Private entities authorized by the Panama Maritime Authority;
• Operations carried out in the stock market;
• International public passenger transport services by land, air, or sea;
• National public transport services by air;
• Petroleum derivative cargo transportation services;
• Hostels with less than seven rooms;
• Leasing real estate under notarized contracts or registered with the Ministry of Housing by natural or legal persons managing their own assets.

Financial institutions and funds in the scope

As of February 2023, operations and services carried out by banks and other financial institutions and funds will fall under the scope of mandatory e-invoicing. Such institutions and the funds include financial leasing companies and investment funds, banking credit, trust, financial institutions governed by special laws, cooperatives, savings fund institutions, pension funds, retirement and social security funds, and savings and loan entities.

Regimes in the scope

The e-invoicing requirement must also be met for the operations carried out by the companies under the following regimes:

• Baru Free Zone (Zona Franca del Barú);
• City of Knowledge (Ciudad del Saber);
• Free Zones (Zonas Francas);
• Petroleum Free Zone (Zona Libre de Petróleo);
• Multinational Enterprises Headquarters Regime (Sede Empresas Multinacionales - SEM);
• Panama Pacifico Special Economic Zone (Área Económica Especial Panamá Pacifico - AEEPP);
• Colon Free Zone (Zona Libre de Colón - ZLC).

Although companies in the SEM regime are exempted from using authorized fiscal equipment, they will have to implement e-invoicing via SFEP.

Furthermore, Executive Decree No. 25 establishes exemptions from complying with the invoice requirements, which taxpayers may request temporarily. The exemption can be granted due to one of the following reasons:

• No access to the internet service in the taxpayers’ domicile; or
• The nature or volume of the activities carried out requires a specific schedule for implementing the appropriate billing methods.

As we informed you before, some taxpayers in Panama have already joined the e-invoicing pilot program. SFEP (Sp. Sistema de Facturación Electrónica de Panamá) is a delegated clearance model, where taxpayers can issue e-invoices through service providers accredited by the government (PAC) or through the SFEP website. The Panamanian electronic invoicing model is very similar to the ones already established in Mexico or Guatemala.

The government’s current ambition is for every business to adopt the e-invoicing system as soon as possible. Following timelines are already available for certain taxpayer groups:

• 1 January 2022: All newly registered taxpayers with RUC (tax ID) must issue electronic invoices under the e-invoicing system of Panama (SFEP);
• 30 July 2022: All businesses are obliged to send e-invoices to the public entities (B2G) under SFEP;
• 2 January 2023: Taxpayers who participated in the Pilot program must start issuing electronic invoices for all domestic transactions.

Furthermore, the government shall announce the adoption calendar for the other entities not yet notified to join the new e-invoicing system.

The new Law can be found at www.asamblea.gob.pa (available in Spanish). Businesses subject to exemption from electronic invoicing are listed in the second paragraph of Article 12 (p. 18).

* Sp: Proveedor Autorizado de Certificación

Some large businesses took part in the e-invoicing pilot programme between 2018 and 2019, but new regulations have been introduced since its end.

The new model

The Continuous Transaction Controls (CTC) model is already developed. It will be the same as the model used in countries such as Mexico, Peru and Guatemala. The main particularity of this model is that an e-invoice will be approved or cleared by an Accredited Service Provider (ASP) instead of the Tax Authority.

How will it work?

The taxpayer will have to create an XML file with the electronic certificate and send it to the ASP for clearance. At the same time, the taxpayer will need to send the invoice to the buyer in an agreed format. The most common practice is to send a PDF via e-mail, but it will require including a QR code for automatic processing.

To summarise, these are the two main actions the taxpayer will be expected to carry out:

• Create an XML with an e-certificate and send it to the Accredited Service Provider;
• Send the invoice with a QR code in the agreed format to the buyer.

After receiving the invoice from the supplier, the buyer will have the option to validate it with the Tax Authority.

There is no specified date yet when issuing e-invoices will become mandatory. Pagero will closely follow the developments in Panama to provide the best solution for our customers conducting business in this region.

E-invoicing implementation was planned to be launched in three phases. The pilot phase, where 43 companies joined, followed by voluntary adoption, and finally the mandate, when e-invoicing becomes mandatory for every company.

Panama is currently in the voluntary adoption phase. This means that each company that wants to join the model, has to apply with and get approval from the DGI.