The global tax environment is undergoing an unprecedented transformation, and Panama is no exception. For years, many organisations have treated their transfer pricing obligations as a mere administrative formality. Filing the annual study and completing the relevant forms seemed sufficient to avoid penalties. However, tax authorities have now sophisticated their analysis and audit methods.

By 2026, the focus of tax administrations will change drastically. Reviews will no longer be limited to verifying that a formal document exists in a folder. Scrutiny will now demand proof that intercompany operations have a legitimate business reason and align with the operational reality of the multinational group. This scenario forces us to rethink our tax strategy completely.

In this article, we explain how your company can anticipate these demands. We analyse why it’s vital to shift from a mindset of simple compliance to one of active defence, based on economic substance, information consistency, and empirical evidence. By understanding these factors, you can make forward-looking decisions with complete confidence.

The new tax paradigm for 2026

International and local regulations are converging on a clear objective: to ensure that profits are taxed where value is genuinely created. In Panama, the Dirección General de Ingresos (DGI) has strengthened its inspection tools, in line with OECD guidelines and the BEPS action plan. This means that traditional transfer pricing studies, based solely on superficial financial comparables, will lose their protective effect.

By 2026, the tax authority will expect every intercompany transaction to be supported by a solid business narrative. Your company will need to convincingly articulate why an operation was structured in a certain way and how that structure benefits the parties involved from a strictly commercial perspective. Moving from compliance to defence means building an argumentative shield before the authorities question your operations.

We recommend business leaders anticipate this level of detail. Proactively addressing these requirements not only reduces tax contingencies but also optimises your group’s operational structure.

Economic substance as a central pillar

The concept of economic substance will be the main filter for tax authorities. It’s no longer enough to sign intercompany contracts that stipulate the provision of services or the transfer of goods. You must demonstrate that the entity receiving the income has the real capacity to assume the risks and perform the functions described on paper.

Evaluation of personnel and assets

To justify economic substance, companies need to document the resources involved in each transaction. This includes detailing personnel profiles, their daily responsibilities, the physical location where they operate, and the technological or tangible assets they use. If a Panamanian subsidiary invoices management services to other entities in the region, it must have qualified managers and appropriate tools within Panamanian territory.
Legitimate business reason

Every intercompany operation must have a purpose beyond tax savings. Future transfer pricing documentation will need to explain the real economic benefits gained from interacting with related parties. By building this narrative with tangible proof, we help you generate an unparalleled understanding of your own business model when facing third parties.

Consistency of financial information

A common error we detect in audit processes is the lack of alignment between different corporate documents. When the transfer pricing report tells one story, but the financial statements, tax returns, and customs reports tell another, the company is exposed to a serious risk.

According to the OECD, consistency is vital for a successful defence strategy. Any discrepancy between the sworn income statement, audited financial statements, and the transfer pricing report will raise immediate red flags for the Dirección General de Ingresos (DGI).

You must ensure that all areas of your organisation collaborate closely. The accounting department, the tax team, and operational management need to share the same vision and report consistent data. Working collaboratively eliminates grey areas and builds an impenetrable defence.

Empirical evidence and data traceability

The transition from compliance to defence is consolidated through the systematic collection of evidence. During an audit, verbal explanations are worthless if they are not supported by a clear documentary trail.
Your organisation must maintain detailed records of all communications, quotes, market studies, and emails that justify decision-making at the time the intercompany transaction was agreed. This level of traceability demonstrates that prices were set under arm's length conditions and not as a subsequent reaction to make the numbers add up at the end of the year.

Implementing internal controls that automate the collection of this empirical evidence will allow you to manage tax risk efficiently. Digitalisation and orderly documentation are indispensable allies in this fiscal transformation process.