What Happened
Panama requires audited and certified financial statements from companies, institutions and certain organizations so tax authorities and other stakeholders can verify reported results and financial position. The Ministry of Economy and Finance’s Dirección General de Ingresos (DGI) may request these statements to validate income tax declarations and to document administrative reviews.
Legal framework
The obligation to prepare and make available audited financial statements is set out in the Código Fiscal, notably in Articles 699 and 710. Under these provisions the DGI is empowered to require taxpayers to submit copies of the statements they present to banks and financial institutions. The law warns that inconsistencies between a filed income tax return and audited financial statements may be treated as tax fraud.
Article 710 further requires all legal entities established in Panama, including those operating in free zones, to prepare annual financial statements in accordance with generally accepted accounting principles. Those statements must be endorsed by an independent Contador Público Autorizado (CPA), issued within 90 days after the fiscal year end, and kept available for DGI review.
Who uses the statements
Beyond tax authorities, audited financial statements serve multiple users: shareholders, prospective investors, financial creditors and suppliers extending credit. Institutionally, the requirement supports transparency for cooperatives, trade unions, non-profit associations and boards of properties governed by the Horizontal Property Regime (Law 284 of 2022).
Required content
According to the guidance summarized in the source, the set of financial statements must include a balance sheet, an income statement, a statement of changes in equity (including retained earnings), a cash flow statement and the key explanatory notes that aid interpretation. The endorsement by a licensed CPA and timely issuance are central to legal compliance.
What this means
For businesses and organizations in Panama, compliance with these rules is essential for tax transparency and for maintaining trust with lenders, investors and partners. Audited statements provide a standardized, third-party-verified view of a company’s finances, making it easier for authorities and market participants to assess reported results. Entities operating in free zones or under special regimes must pay particular attention to meeting the 90-day issuance and record retention requirements.
In practice, preparing comprehensive, audited financial statements reduces the risk of disputes with the DGI and supports access to financing and investment. Firms should work with qualified CPAs familiar with Panamanian accounting standards and the Código Fiscal provisions to ensure documents meet legal and practical expectations.