On 26 December 2018, Panama released the Law No.69 in the Official Gazette No.28684-B which sets out the method for calculating income earned from the “transfer or exploitation” of intellectual property assets. The law also includes provisions on applying transfer pricing regulations to companies under preferential tax rules.

Starting from fiscal year 2019, transfer pricing rules will apply to all transactions carried out by an individual or legal person with related parties which are located in the Colόn Free Zone. The rules will also apply for the entities operating; (i) in the Oil Free Zone (Zona Libre de Petróleo) under Cabinet Decree 36 of 2003; (ii) in the Special Economic Area of Panama-Pacifico; (iii) under the multinational headquarters regime; (iv) under the City of Knowledge regime; or (v) in any other current or future free zones or special economic areas.

In addition, the TP rules also will apply to transactions carried out by those companies with affiliated parties that are: (1) located in Panama; (2) tax residents of other jurisdictions; (3) established in any other free zones or special economic areas; or (4) operate under a preferential tax regime.