Wednesday, October 4th, the Ministry of Economy & Finance (read: Tax Department) published in the Gazette 174-page list of companies which have been struck off the register. This striking off is done in accordance with Article 318-A, subsections 2, 3 & 4 of the Tax Code. Article 318-A of the Tax Code deals with the payment of annual renewal fees (franchise tax) for corporations, foundations & LLCs.
This is the third such list it has published this week. The first was published on Monday. A second on Tuesday, and a fourth list was published today, just before I published this article! I almost missed that list. It’s an amazing 40,000 companies that are not in good standing. It’s estimated that these companies owe some $36 Million in government fees alone.
Effects of striking off:
Subsection 2 of Article 318-A establishes that failure to pay this annual renewal fee for 3 years consecutively results in striking off. Subsection 3 establishes the following effects of being struck off:
- blocked from initiating legal action, doing business transactions or transfering assets;
- unable to make claims or exercise rights;
- blocked from filing corporate changes of any type.
Nonetheless, if your corporation is struck off, you may do the following:
- request reactivation (paying an additional $1,000.00 penalty fee for reactivation);
- defend any legal process begun against the company;
- continue with any legal processes which started before striking off.
Automatic dissolution after striking off:
It is important to note that you only have a 2-year period after it is struck off to reactivate it, otherwise striking off leads to automatic dissolution at the Public Registry. Consequently, the company will be considered to be wound up. This means that any company that is in arrears for 5 years or more, is automatically dissolved (previously this was a 10-year period).
The lists of companies can be found in the following gazettes:
- Resolution 201-5610
- Resolution 201-5611
- Resolution 201-5612
- Resolution 201-5613
- Resolution 201-5614
- Resolution 201-5615
- Resolution 201-5616
- Resolution 201-5617
- Resolution 201-5618
- Resolution 201-5619
- Resolution 201-5620
- Resolution 201-5621
- Resolution 201-5622
- Resolution 201-5623
- Resolution 201-5624
- Resolution 201-5625
- Resolution 201-5626 (MBCL – Muren)
- Resolution 201-5627
- Resolution 201-5628
- Resolution 201-5629
- Resolution 201-5630 (Puente Hombre – Rokewood Trading)
- Resolution 201-5631
- Resolution 201-5632
- Resolution 201-5633
- Resolution 201-5634
- Resolution 201-5635 (USA – ZYXXX)
What do you need to do?
If you a corporation that owns property or has assets of any kind, and you have not been paying the annual renewal fees, then you have 2 years to reactive the company if it is on these lists. You need to pay all outstanding government fees and the $1,000 reinstatement fee (and registered agents and directors fees, if applicable). Otherwise, in 2 years from now, the Public Registry will dissolve the company automatically.
This is the first time any such list has been published since the amendment was introduced in 2016. Therefore, it contains companies that have not paid for five or even seven years, and not just those who owe 3 years in fees. This is the moment to bring your Panamanian corporation back into good standing if you are actually using it or you need it.
Finally, if you have any questions regarding your Panama Corporation and striking off, please do not hesitate to contact our office. Our staff would be happy to assist you.