HOW THE BUSINESS CLOSURE PROCESS SHOULD BE TO AVOID FUTURE TAXES.
In the process of closing companies to avoid future taxes, it is necessary to carry out procedures with the following entities:
1) Public Registry (if it is a company or legal person),
2) Ministry of Commerce,
3) Local municipality,
4) General Directorate of Income (DGI),
5) Social Security Fund (in the case of having had employees),
6) Banks.
In the Public Registry, an Act of the Shareholders’ Meeting must be entered with the Dissolution of the company or legal entity. As it is a legal person, the company must be dissolved. It should be noted that if you choose to temporarily deactivate the business to activate it later, you must continue to pay the Flat Rate tax and the fees of your Resident Agent.
On the other hand, the Ministry of Commerce must cancel the Operation Notice through the online computer platform Panamaemprende. The other entities will ask for proof of the cancellation in order to deactivate the business in their records and stop collecting future taxes.
In each local municipality, where the company has carried out operations, written notification must be made of the permanent closure of the operations of the company or business attached to the municipality.
At the DGI, national tax obligations must also be canceled. Mainly the business license tax and income tax and submit the declaration of closure or non-operation through the company’s accountants through the online platform E-tax2. In addition to the above, an original Memorial and a copy must be submitted asking the DGI to accept the dissolution of the company, this request must be duly signed by the legal representative or his lawyer.
After liquidating the employees (paying the compensation to the employees), the employer must notify the Social Security Fund of the Cessation of Operations of the company no later than thirty calendar days after having presented the return in zero with the form of “termination request” which can be downloaded at the url address www.css.gob.pa/cesedeoperaciones.html. Failure to comply with this provision violates Article 88 of Organic Law 51 of the CSS of December 27, 2005.
The importance of notifying the municipality, the CSS and the DGI of the closure should be highlighted, since these entities will continue to collect taxes and can collect them through the courts.
As for the Banks, once the closing is done, it is convenient to close the bank accounts if you are not going to maintain high balances because the banks will continue to debit minimum balance charges until the account is emptied.
In the event that the company is engaged in businesses that are supervised by the state, notifications must also be made to the respective regulatory entities to avoid fines.
As you can see, the process of closing a company must be planned, and carried out in a meticulous way.
At ba-lawfirm.com, we have Panamanian Lawyers, ready to help you with the procedures of your company.
You can contact us at ba-lawfirm.com or through our email consultas@ba-lawfirm.com
