Bill 24.

Summary.

The bill amends Law 186 of 2020 concerning entrepreneurship companies in the Republic of Panama. It proposes that they may be formed by 2 to 10 adult individuals of any nationality who are permanent residents of the country. A person who already belongs to an entrepreneurship company could not be a shareholder, attorney-in-fact, or legal representative of another, and the same group of people could not form more than one. Their members could still participate in other legal entities, associations, or foundations. The Entrepreneurship One-Stop Office (Ventanilla Única de Emprendimiento) would have authority to decide questions about the interpretation of their activities.

Regarding corporate purpose, the bill excludes the activities of the Obligated Non-Financial Entities covered by Article 40 of Law 124 of 2020 and economic activities subject to prior requirements under Article 2 of Law 5 of 2007, including subsequent rules governing those matters. It permits the development of artisanal products, artisanal cosmetics, beverages and craft beers, and construction and remodeling, subject to the construction exceptions listed in the text because they require prior authorization. It allows supplementary, complementary, or ancillary activities connected to the principal activity. The Entrepreneurship One-Stop Office would reject registration of a corporate purpose that includes prohibited activities. Companies whose activities do not require a Notice of Operation could register in the Business Registry of the Micro, Small and Medium Enterprise Authority (Registro Empresarial de la Autoridad de la Micro, Pequeña y Mediana Empresa, AMPYME) without certification from the Ministry of Commerce and Industries (Ministerio de Comercio e Industrias).

The companies would have to keep records of ownership interests, minutes, administrators, and accounting transactions. Their administrators could determine how to keep those records; if they use electronic or digital means, the information would have to be available in a legible and printable form. Entrepreneurship microenterprises with annual income of no more than 50,000 balboas (B/. 50,000.00) would file a Simplified Income Tax Return instead of a sworn national income tax return. The Directorate General of Revenue (Dirección General de Ingresos) of the Ministry of Economy and Finance (Ministerio de Economía y Finanzas) would provide the form, and late filing would incur a fine of 20 balboas (B/.20.00). Entrepreneurship small enterprises whose income exceeds 150,000 balboas (B/.150,00.00) but does not exceed 1,000,000 balboas (B/. 1,000,000.00) would be taxed under Article 699-A of the Tax Code, as amended by Law 189 of 2020, if they register in AMPYME’s Business Registry.

The bill allows other companies to convert into entrepreneurship companies and entrepreneurship companies to convert into another type of company through the corresponding minutes and approvals. To enter the regime, a company could not have been formed more than 7 years earlier or have had annual income exceeding 80,000 balboas (B/. 80,000.00) in the preceding year. Its shareholders could dispense with a resident agent; in that case, the legal representative would provide the information required by Panamanian authorities. Converted companies would have access to the incentives only if they had not previously benefited from incentives under other laws. The benefits would be granted only once, beginning upon registration in AMPYME’s Business Registry, and converted companies would keep the records required by Article 20.

Entrepreneurship companies would be exempt from the annual flat fee upon formation and for the 2 years following their registration in the Public Registry (Registro Público). After 2 years of registration in AMPYME’s Business Registry, those that remain active would begin paying the annual flat fee and income tax. They could request an extension of up to 2 years from the Entrepreneurship One-Stop Office if they demonstrate net profits of no more than 36,000 balboas (B/. 36,000.00) in the preceding tax period. They would retain their corporate status and registration after the benefits expire and would issue invoices digitally. The Micro, Small and Medium Enterprise Authority could enter into agreements with municipalities for special taxation of entrepreneurship microenterprises during their first 2 years after formation. The bill affects those companies, their shareholders and administrators, artisanal and construction activities, and municipalities; it also assigns responsibilities to the public entities mentioned.