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The modern corporate world runs on transparency. The OECD, the FATF and the European Union demand adherence to anti-money-laundering and tax-transparency standards, and operating outside them risks penalties, asset freezes and — most damaging of all — the loss of banking. Gerli & Co. positions clients ahead of the regulatory curve. We treat compliance not as an administrative hurdle but as a protective shield that validates the legitimacy of a client's wealth and operations before banks and authorities worldwide.
On 28 May 2026 Panama enacted Law 526 of 2026 (published in Official Gazette No. 30534-B), adding a new chapter to the Tax Code and introducing economic substance rules. The reform — sometimes called "territoriality 2.0" — is Panama's answer to the European Union's requirement that foreign-source-income-exemption regimes be conditioned on real local activity, and it is central to Panama's removal from the EU list of non-cooperative jurisdictions. The rules take effect from the 2027 fiscal year, with implementing regulations to be issued by the Executive within 90 days of enactment.
Crucially, Law 526 does not apply to every Panamanian company or foundation. It applies only to an entity that simultaneously (i) is incorporated or domiciled in Panama, (ii) is a member of a multinational group — two or more entities linked by ownership or control and tax-resident in different jurisdictions — and (iii) earns foreign-source passive income (dividends, interest, royalties, capital gains, income from immovable property, and similar). A standalone Panamanian structure that is not part of a multinational group falls outside the regime.
An entity in scope that demonstrates adequate economic substance in Panama is a "Qualified Entity" and keeps the ordinary territorial treatment — its foreign-source passive income remains untaxed. An entity that cannot demonstrate substance is "non-qualified" and pays a single, definitive 15% tax on the net taxable income concerned. Substance means real human resources and facilities in Panama, strategic decision-making taken in Panama, and adequate local operating expenditure — assessed by the Ministry of Economy and Finance against the nature, scale and complexity of the activity. Virtual or purely nominal arrangements will not suffice.
The law expressly excludes sectors where substance is already evidenced by prudential regulation — most importantly, under Article 707-M, owners, operators and managers of Panama-flagged vessels, whose substance is evidenced through registration and supervision by the Panama Maritime Authority; and, under Article 707-N, regulated financial entities. These exclusions are not automatic: the entity must evidence its position before the Ministry of Economy and Finance.
Our compliance department performs a clear diagnostic — is the entity part of a multinational group, does it earn covered passive income, does an exclusion apply — and then designs and implements the right route. Where substance is required, we help establish genuine local direction, personnel and expenditure (including compliant outsourcing to qualified Panama-based providers, which the law permits), and we prepare the mandatory annual sworn return. The objective is simple: keep your foreign-source income exempt and eliminate the risk of the 15% charge.
Separately from ESR, Panamanian entities that do not operate locally and act as offshore holding or trading vehicles must maintain detailed accounting records and supporting documentation, and must place that documentation with their Resident Agent in Panama. Beneficial-ownership information must be kept current in the Unique Registry of Beneficial Owners (RUBF). Gerli & Co. provides full accounting compilation and verification, maintains the resident-agent file to standard, and keeps beneficial-ownership data correctly registered — so the entity satisfies the General Directorate of Revenue (DGI) and remains in good standing rather than exposed to fines or striking-off.
Most providers will incorporate a company and then leave the owner alone to discover, too late, that the rules have changed. We do the opposite. Because Gerli & Co. analyses substance and transparency obligations as part of the structure itself, our clients are not surprised by Law 526 or Law 254 — they are already positioned for them.