Corporate franchise tax in Panama

It may be a surprise to many but Panama is not a tax haven and even companies with no income earned locally must pay an annual tax known as Tasa Unica.  The tax and surcharges are described in Article 318-A in Wikisource and translated as draft as follows:

Article 318-A. ^[2] Corporations, limited liability companies and any other legal entities, national or foreign, will pay at the time of registration and in subsequent years a single annual fee of three hundred balboas (B / .300.00) to maintain full validity. Private interest foundations will pay at the time of registration a first single annual fee of three hundred and fifty Balboas (B / .350.00). In subsequent years, the payment for that concept will be four hundred balboas (B / .400.00) to maintain the full validity of the foundation. For legal purposes, full registration will be understood as valid in the Public Registry of Panama. The obligation to pay the annual single rate is not extended to non-profit organizations, cooperatives and civil societies.

     ^[3]The first annual single fee referred to in this article shall be paid at the time of registration of the legal entity together with the respective registration rights, as if it were part of the Registration Rights. Once the first single fee has been charged, the Public Registry of Panama will remit said amount to the General Directorate of Revenue on the first business day of the week following the date of its collection and will report the name and registration number of the respective company or foundation .

     The second and following annual single rates will be paid as follows:

to.	Until July 15 of each year, by the legal person whose date of registration of the social pact or constitutive document in the Public Registry of Panama corresponds to the months from January to June, inclusive.
b.	Until January 15 of each year, by the legal person whose date of registration of the social pact or constituent document in the Public Registry of Panama corresponds to the months from July to December, inclusive.

     These payments will be made through the legal representative or the registered agent or resident of the legal person.

     At the time of payment, the legal representative or registered or resident agent must declare the date on which the articles of incorporation or constitutive document has been registered in the Public Registry. This affidavit will be made in a form that, for this purpose, will be provided by the General Directorate of Revenue ^[4]

     Payment of this out-of-term fee will cause the single surcharge of fifty balboas (B / .50.00) per year or fraction of the year. For these purposes, the provisions of articles 1 and 2 of Law 60 of 1973 shall not apply .

     Taxpayers may pay this fee in advance, in which case such payment shall be deemed final for the periods covered.

Paragraph 1. ^[3] Failure to pay the fee in the period in which it is caused will have the effect of not registering any act, document or agreement and the non-issuance of certifications related to national and foreign legal persons, except ordered by competent authority or those requested by third parties for the specific purpose of enforcing their rights, in which case the certification will be issued exclusively in a different format for these purposes, indicating that it is in default.

Paragraph 2. ^[3] For the purposes of the suspension of registrations and the non-issuance of the certifications referred to in the preceding Paragraph, the General Directorate of the Public Registry of Panama will consult in each case the information made available to the Directorate General Income, on national and foreign legal persons who are up to date in the payment of the single rate.

Paragraph 3. ^[5] Each time the taxpayer incurrs in the non-payment of the annual single rate for two consecutive or alternate periods will have, in addition to the surcharge, the application of a fine of three hundred balboas (B / .300.00) and the annotation of a marginal indicating that it is in a state of delinquency. When the taxpayer pays the delinquent fees with their respective surcharges and the amount of the referred fine, the restoration of the services of the Public Registry of Panama and the lifting of the marginal entry will take place.

Paragraph 4. ^[3] Failure to pay the single rate for ten (10) consecutive periods will have the effect of definitive withdrawal of the legal entity from the Public Registry. As a consequence, it will be considered dissolved, with all the legal effects that this entails.

The natural or legal person, national or foreign, who has received from third money for the purpose of making the payments of this rate and does not enter them in favor of these to the National Treasury will be sanctioned with a fine not less than five (5) times nor greater than ten (10) times the amount not paid.

Paragraph 5. ^[3] Dissolved the legal person for non-payment of the annual fee for an uninterrupted period of ten (10) years, which will take effect from the entry into force of Law 6 of 2005, the period will begin of dissolution of three (3) years.

During that period any director, dignitary, member of the founding council, resident agent, partner or an interested creditor may carry out their rehabilitation, paying all amounts owed as a fee plus a fine of one thousand Balboas (B / .1,000.00). The rates of the expired years during the three-year dissolution period will be included in the payment.

Once rehabilitated, the legal entity will recover its existence and may resume its activities.

After the expiration of the three (3) year period indicated above without its rehabilitation having occurred, the Public Registry, after verifying that fact, will cancel the registration of the legal entity and its name may be used by any interested party.

The General Directorate of Revenue will prepare a list of legal persons with a delinquency of ten (10) years and promote their wide dissemination and publication, for the purpose of:

1. That the Public Registry write down the marginal dissolution for non-payment of a single rate.

2. That those interested can promote their rehabilitation.

Paragraph 6. ^[3] The annual single-rate payment obligations, declared until December 31, 1990, are declared prescribed, provided there is concurrence with the following facts:

to. That they have a prescribed prescription period exceeding fifteen (15) years or more.

b. That the taxpayer has not carried out or executed any own management of recognition of the obligation.

C. That the tax administration has not issued, at the date of entry into force of this Law, any suitable administrative act of interruption of the prescription.

In the event that a case of alleged prescription of the debt is declared or filed by mistake, it will be deemed interrupted, without prejudice to the administrative sanctions that are merited, and the period of its configuration will be restarted from the date of the alleged declaration or of your file if necessary.

Transitional Paragraph ^[3] Payments entered in official receipts are considered made by taxpayers, even if they had not been effectively entered into the National Treasury for reasons not attributable to the taxpayer, his legal representative or the resident agent. The collection of late payments and surcharges originated in the non-payment of the single rate to legal persons, whose delinquencies are attributable to the incorrect migration of data or inconsistencies in their update, and to those who verify, through receipts officers, have made the corresponding payments.

The increase in the amount of the second single rate onwards to three hundred balboas (B / .300.00) will be effective as of January 1, 2006.

Transitional Paragraph ^[6] For the purposes of the entry into force of the new single rates indicated in this article, as amended by Law 28 of 2012, corresponding to the annual renewals of private interest foundations, it will be understood that they govern from from January 1, 2013; that is, they take effect for those payments that correspond to the rates applicable to fiscal 2013 and subsequent periods.

References

1. ↑ National Assembly (Panama) (June 29, 1956) [ Law 8 of January 27, 1956 ] by which the Fiscal Code of the Republic is approved. Official Gazette (12,995) p.127
2. ↑ Article 318-A was modified by article 1 of Law 28 of 2012 , promulgated in Official Gazette 27029-C on May 8, 2012.
3. ↑ ^{Jump to:3.0 3.1 3.2 3.3 3.4 3.5 3.6} Article 318-A was modified by article 1 of Law 49 of 2009, promulgated in Official Gazette 26370-C on September 17, 2009.
4. ↑ With Law 24 of 2013 , article 34 specifies that in any legal norm, document or ongoing process in which the General Directorate of Revenue is designated or formed, it will be understood as referring to the National Public Revenue Authority.
5. ↑ As amended by article 1 of Law 28 of 2012 , promulgated in Official Gazette 27029-C on May 8, 2012.
6. ↑ As it was with Law 52 of 2012.

French court declares trust registry of beneficiaries as unconstitutional

While the French administration has declared that Panama is everything but a stain on civilization because of its privacy laws, its Constitutional Court - chaired by Laurent Fabius - has deemed the public registry of beneficiaries to be unconstitutional violation of rights enshriend in the 1789 Declaration of the Rights of Man and the Citizen.

Decision no. 2016-591 QPC of October 21, 2016

Ms. Helen S. [Public Registry of Trusts]

THE CONSTITUTIONAL COUNCIL WAS ASKED TO DECIDE UPON a priority matter of constitutionality on 25 July 2016 by the Conseil d'État (decision no. 400913 of 22 July 2016), under the conditions set out in Article 61-1 of the Constitution. This matter was put forth for Ms. Helen S., by Stéphanie Auféril Esq., Marine Dupas Esq. and Stanislas Pannetier Esq., attorneys admitted to the Paris bar. It was recorded by the General Secretariat of the Constitutional Council under number 2016-591 QPC. It relates to compliance with the rights and freedoms that the Constitution guarantees in the second paragraph of Article 1649 AB of the General Tax Code in its report from Law number 2013-1117 of 6 December 2013 relating to the fight against tax fraud and serious economic and financial crime.

In light of the following texts:

• the Constitution;
• Ordinance no. 58-1067 of 7 November 1958 as amended, concerning the basic law on the Constitutional Council;
• the General Tax Code;
  -Law number 2013-1117 of 6 December 2013 relating to the fight against tax fraud and serious economic and financial crime;
• The Regulation of 4 February 2010 on the procedure applicable before the Constitutional Council with respect to applications for priority preliminary rulings on the issue of constitutionality;

In light of the following items:

• the observations made on behalf of the applicant by SCP Matuchansky-Poupot-Valdelievre, Attorney at the Conseil d'État and the Cour de Cassation, registered on 22 August 2016;
• the observations of the Prime Minister, registered on 22 August 2016;
• the documents produced and appended to the case file;

Having heard Olivier Matuchansky Esq., attorney at the Conseil d'État and the Cour de cassation, and Ms. Auféril Esq. for the applicant, and Mr. Xavier Pottier, appointed by the Prime Minister, at the public hearing of 11 October 2016;

And having heard the Rapporteur;

THE CONSTITUTIONAL COUNCIL DECIDED ON THE FOLLOWING:

1. The second paragraph of Article 1649 AB of the General Tax Code, in its report from Law number 2013-1117 of 6 December 2013 mentioned herein above, states: "A Public Registry of Trusts has been instituted. It mandatorily lists the trusts registered, the name of the administrator, the name of the settlor, the name of the beneficiaries and the date the trust was formed".
2. The applicant claims that these provisions fail to take into account the law in regard to private life and are tarnished by incompetence under the conditions of this right insofar as they allow the public free and unrestricted access to confidential information related to the composition of a trust. These provisions also fail to take into account the principle of equality before the law.

• On the merits:

3. The freedom proclaimed by Article 2 of the 1789 Declaration of the Rights of Man and the Citizen implies the right to respect for private life; Owing to this, collecting, recording, keeping, consulting and communicating information of a personal nature shall be justified by general interest and implemented in an adequate and proportional manner.
4. The Public Registry of Trusts instituted by the second paragraph of Article 1649 AB of the General Tax Code identifies all trusts, under Article 792-0 bis of this Code, and declaring them is made obligatory by the first and fifth paragraphs of this Article. These are trusts which the administrator, the settlor, or at least one of the beneficiaries has its fiscal domicile in France or which include a good or a right located here. For each trust, the registry includes the date the trust was formed as well as the name of the administrator, the settlor, and its beneficiaries. The fourth paragraph of Article 1649 AB refers to a decree in the Conseil d'État and the right to specify the means to consult this Public Registry.
5. By these disputed provisions, through emphasising transparency of the trusts, the legislature intended to prohibit their use for the purpose of tax evasion and money laundering. It also sought the objectives enshrined in the constitution of the fight against fraud and tax evasion.
6. Listing, in a registry accessible to the public, the names of the settlor, the beneficiaries and the administrator of a trust provides information on the manner in which a person intends to manage his or her estate. The result is an infringement on the right of respect for private life. However, the legislature, which did not specify the quality nor the motives that justify consulting the registry, did not limit the people that have access to the information in this registry, placed under the responsibility of the tax administration. Therefore, these disputed provisions have a clearly disproportionate effect on the right of respect for private life in regard to the objectives sought. As a result, without reviewing other grievances, the second paragraph of Article 1649 AB of the General Tax Code should be declared counter to the Constitution.

• On the Effects of the Ruling of Unconstitutionality:

7. According to the second paragraph of Article 62 of the Constitution: “A provision declared unconstitutional on the basis of Article 61-1 is revoked as from the publication of the decision of the Constitutional Council or at a later date stipulated in the decision. The Constitutional Council determines the conditions and the limits according to which the effects produced by the provision shall be liable to be challenged". In principle, the declaration of unconstitutionality should benefit the individual who brought up this priority matter, and the provision declared unconstitutional may not be applied in proceedings pending on the date of publication of the decision of the Constitutional Council. However, the provisions of Article 62 of the Constitution provide the latter with the power to set the date of repeal and to delay its effects in time and to reconsider the effects that the provision may produce before this declaration takes effect.
8. In this case, no motive should justify a delay of its effects of unconstitutionality. This should take effect from the date of the publication of this decision.

HELD:

Article 1. - The second paragraph of Article 1649 AB of the General Tax Code in its report from Law number 2013-1117 of 6 December 2013 relating to the fight against tax fraud and serious economic and financial crime is unconstitutional.

Article 2. - The declaration of unconstitutionality of Article 1 shall take effect under the conditions set out in paragraph 8 of this decision.

Article 3. - This decision shall be published in the Journal officiel of the French Republic and notified in the conditions provided for in Section 23-11 of the Ordinance of 7 November 1958 referred to hereinabove.

Ver texto en: https://www.conseil-constitutionnel.fr/decision/2016/2016591QPC.htm