Panama: Transfer pricing report submission date is postponed (COVID-19)

Panama: Transfer pricing report submission date

One response of the government to the coronavirus (COVID-19) pandemic has been to postpone the due date for filing the transfer pricing report.


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The date for submitting a transfer pricing report generally is extended until 30 September 2020—that is, the period is extended until 30 September 2020 for the submission of the transfer pricing report with respect to the operations conducted with related parties during the fiscal period 2019, for those taxpayers with regular fiscal periods.

The pandemic is also affecting economic circumstances affecting the analysis of transfer prices and in particular regarding comparability analysis. Taxpayers encountering economic challenges need to document the impact resulting from COVID-19 so as to have information available if requested by the tax administration. Having this documentation may make a difference when supporting a company's position in the event of an eventual audit. Among the data that may be useful are the statistics on decrease in sales, the closings of the company, the suspension of labor contracts, and the idle capacity of assets, among others. Another aspect to take into consideration may be extraordinary and non-recurring expenses that the company has incurred as a result of the crisis and that as a general rule would be excluded from the profitability indicators for the analysis of transfer prices.

The documentation process will also provide a process to look for comparables that have faced similar situations and then to make comparability adjustments as necessary.

Another step may be to review intragroup agreements, and to highlight financing transactions that may be affected by variations in interest rates over recent months, and for which reason the terms of financing may need to be renegotiated to comply with the transfer pricing regulations. Similarly, it may be necessary to reform transfer pricing policies to adapt them to the new reality and to redistribute risks within the multinational group.

In current circumstances, some companies may need to restructure. Therefore, it would be prudent to pay special attention to changes in the functions, assets, and risks of both the analyzed party and the companies selected as comparables in previous years in order to determine the possible restructuring.

Read a June 2020 report (Spanish) prepared by the KPMG member firm in Panama

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