The mandatory requirement for any person engaged in commercial or industrial activity or rendering a service, whether natural or juridical, to invoice or issue an equivalent document to evidence any transaction related to the transfer, sale, returns and discounts in general for the sale of goods or rendering of services, without any formality or minimum requirements, has its genesis in Law 76 of December 22, 1976, articles 11 and 12, hereinafter referred to as “Law 76”.
Subsequently, by means of Law 8 of March 15, 2010, hereinafter referred to as “Law 8”, Articles 11 and 12 of Law 76 were amended and the following minimum content requirements were established for the documentation of operations related to transfers, sale of goods and rendering of services in the Republic of Panama: (i) the description according to the type of document, whether it is an invoice or a receipt; (ii) the consecutive and unique numbering; (iii) the registration number of the fiscal equipment, (iv) the name and surname, or company name, address and taxpayer registration number of the issuer; (v) the date (day, month and year) on which the invoice or equivalent document is issued; (vi) the description of the operation with an identification of the quantity and amount; (vii) the breakdown of the tax on the Transfer of Movable Property and the Rendering of Services (ITBMS), the selective consumption tax on certain goods and services (ISC) and of any other withholding tax caused by the operation; (viii) the total value of the transfer, sale of goods or rendering of services or the sum of the two, if applicable (ix) in cases in which adjustments are made to the price, the description and value of these adjustments.
Likewise, Law 8 empowers the Directorate General of Revenue (DGI) to:
Another modification made by Law 8 is that it established the mandatory use of fiscal equipment, previously authorized by the DGI, for those taxpayers who, due to their line of business, volume or nature of their business, required another way of documenting or invoicing their commercial, industrial, professional or similar operations.
Last but not least, Law 8 introduces a list of commercial activities exempted from the use of fiscal equipment, namely: (a) agricultural activity, (b) the transfer of real estate and movable property that must be evidenced or recorded in a public deed; (c) national public transportation services of persons by land and maritime means of transport, (d) operations and services in general performed by banks and other financial institutions, (e) the operations carried out by the Stock Exchange, (f) services rendered under a dependency relationship pursuant to the Labor Code, and (g) services rendered in the exercise of liberal, artisanal and artistic professions.
Subsequently, Law 72 of September 27, 2011, hereinafter referred to as “Law 72”, further amended Law 76 and specified that the obligation to issue invoices or equivalent documents to evidence any transfer of goods or services is independent of the form in which the transfer is perfected, regardless of the form of payment and regardless of the nationality of the parties.
Law 72 introduces new provisions related to the issuance of invoices or equivalent documents, of which we can point out:
To keep pace with the advance of modern technology, in 2018, the DGI issued Resolution 201-5784, authorizing the use of electronic invoicing in the Republic of Panama. A new system that represents benefits for companies, including the following: (i) it represents a saving in operating costs, time and space, by not using paper, it saves on printing, the invoicing process is much faster and more efficient and the physical space of filing cabinets in which to deposit this documentation is saved, since the information remains in the cloud; (ii) improved management of receivables; (iii) decreases the risk of loss of physical documents; (iv) improved document management; (v) improves control processes, facilitating the traceability and security of operations; (vi) is pro-environmental care and protection, since the use of paper is eliminated; (vii) integration of logistical, accounting, financial and administrative processes; (viii) improves the quality of the relationship between customer and supplier.
The implementation of electronic invoicing required that, by virtue of Executive Decree 766 of December 29, 2020, as amended by Executive Decree 147 of May 26, 2021, regulations on this invoicing modality were introduced.
Recently, Law 256 of November 26, 2021, hereinafter “Law 256”, amended Articles 11 and 12 of Law 76, which establishes that the documentation of operations related to the transfer, sale of goods and rendering of services must be issued through the use of fiscal equipment (previously authorized by the DGI) or by means of the new Panamanian Electronic Invoicing System (SFEP).
Law 256 modifies the minimum content requirements that the documentation of operations related to transfers, sale of goods, rendering of services in the Republic of Panama must comply with: (i) the applicable denomination according to the type of document, whether it is an invoice or a non-fiscal document; (ii) unique numbering per invoicing station; (iii) the registration number of the fiscal equipment, (iv) the name and surname, or company name, domicile and Unique Taxpayer Registration Number (RUC) and Verification Digit (DV) of the issuer; (v) the name and identification of the recipient, including identity card, passport or RUC and DV; (vi) the date (day, month and year) of issuance of the invoice or equivalent document; (vii) the description of the operation with an indication of the quantity and amount; (viii) the breakdown of the tax on the Transfer of Movable Property and the Rendering of Services (ITBMS), the selective consumption tax on certain goods and services (ISC) and of any other withholding tax caused by the operation; (ix) the individual value of the transfer, sale of goods or rendering of service and of the total amount of the invoice, date, manner or payment conditions; (x) in the cases in which additional items are charged or received, discounts, bonuses, cancellations and any other adjustment to the agreed price or remuneration, the description and value of such items; and any other formality required by the DGI.
It is important to point out that Law 256 establishes that the person who is the recipient of the goods or services described in the invoice or equivalent document must request the issuance of the invoice, either in physical or digital format, otherwise they may be fined. Additionally, it establishes the obligation of all commercial establishments to place a sign indicating the invoicing method they use, the omission of which will result in a fine.
In addition to the sanction mentioned in the previous paragraph, the DGI is authorized to place a label in those commercial establishments that do not comply with the provisions set forth in Law 256, which will be placed in a visible place at the entrance of the commercial establishment and must be preserved. The manipulation of this label will result in a fine.
All the formalities established by Law 256, for the documentation of operations related to the transfer, sale of goods and rendering of services, are extended to all operations carried out within the existing free zones or free trade zones or those to be created in the future.
Finally, Law 256 introduces a list of commercial activities exempted from the use of fiscal equipment and SFEP, namely:
All exempted activities must document all operations related to the transfer, sale of goods and rendering of services by means of invoices or equivalent documents authorized by the DGI.
Next, I will share with you the aspects that we are most frequently consulted about electronic invoicing:
What is an electronic invoice?
It is an electronic document with a special format (XML), of digital existence, which records and supports operations related to the transfer of goods or the rendering of services, issued through electronic means and that allows tax validity of commercial operations, electronically signed, validated by the DGI and that provides right of execution.
How many modalities are there in SFEP?
There are two modalities under the new SFEP, namely:
Is it mandatory to implement electronic invoicing?
Currently, the adoption of this new invoicing system is voluntary. The regulation establishes that any individual or legal entity that requests the DGI to use electronic invoicing is obliged to implement the use of electronic invoicing. Likewise, any individual or legal entity that in the opinion of the DGI requires it, is required to implement the use of electronic invoices, as long as it is exempted from the use of fiscal equipment, by means of a resolution issued by the DGI.
Beginning January 1, 2022, every new Single Taxpayer Registry (RUC) must use Panama’s Electronic Invoicing System as a means of invoicing.
If I don’t have internet connectivity, can’ t I invoice in any other way?
If it is not possible to invoice by means of authorized fiscal equipment or electronic invoicing, the DGI may exceptionally authorize the use of another means of invoicing or voucher.
Does the electronic invoice have evidentiary force?
Yes, the electronic invoice will be admissible and will have the same probative force as invoices issued by fiscal equipment.
The probative force of the electronic invoice will be guaranteed by means of the issuer’s qualified electronic signature, supported by an electronic certification issued by a certification service provider that must be registered with the National Electronic Signature Directorate of the Public Registry of Panama.
The electronic signature is the technical method to identify a person and indicates that he/she has given his/her consent in relation to the information contained in a data message or electronic document, which must be certified by means of a document called an electronic certificate that will identify the signatory and detect any subsequent changes to the signed data; uniquely link the signatory and the data to which it refers; and gives full legal value to the qualified electronic signature.
The electronic signature and its formalities in the Republic of Panama are regulated by Law 51 of July 22, 2008, Law 82 of November 9, 2012, Executive Decree 684 of October 18, 2013 and various resolutions.
What is required for the process of issuing an electronic invoice?
The format and transmission media must be complied with according to the specifications indicated in the electronic invoice technical sheet, pursuant to resolutions 201-0697 of February 2, 2018, 201-5784 of August 31, 2018 and resolution 201-0294 of January 20, 2021.
Who is the issuer of an electronic invoice?
The issuer of an electronic invoice is the taxpayer registered with the DGI and authorized to issue the invoice electronically.
What are the obligations of the issuer of the electronic invoice?
The issuer must obtain an authorization for the use of electronic invoices from a PAC.
The PAC is the legal entity authorized by the DGI, by means of a resolution, after complying with the registration, evaluation and qualifying processes, to authorize the use of electronic invoicing to taxpayers using its services.
The PAC is regulated by resolution 201-0295 of January 20, 2021.
Electronic documents generated in the Free Invoicing System of the Panamanian Electronic Invoicing System (SFEP) are exempt from PAC authorization.
Obligations of the user issuer of an Electronic Invoice using PAC:
The DGI will regulate everything related to the Free Invoice of the Electronic Invoice System.
What is the SFEP Free Invoicer?
It is a free invoicing tool developed by the DGI that will allow the issuing taxpayer to generate the electronic document, obtain the DGI’s authorization and send it via e-mail to the recipient.
Under the Free Invoicing modality, no electronic signature is required.
In order to qualify for the Free Invoicing modality, the taxpayer must have an annual income of up to One Million Dollars ($1,000,000.00).
¿What is required for an electronic document to be considered an Electronic Invoice?
Who is the recipient of an electronic invoice?
The receiving user is the natural or legal person receiving the goods or services described in the electronic invoice.
What happens if the issuing user, due to technical problems, does not receive a response to the request for authorization of use?
In this case, the issuing user may issue the documents in contingency operation, which is a procedure that must be carried out by adopting the following measures:
Once the technical problem has been solved, the issuer will have to transmit the electronic invoice and documentation issued during the contingency operation according to the specifications of the Technical Data Sheet.
All documents issued under normal operating conditions, which do not have the authorization of use, will be considered invalid and therefore must be issued in contingency operation with a different Unique Electronic Invoice Code.
What should the issuing user do if the electronic invoice transmitted after solving the technical problem is rejected by the DGI or PAC validation system?
Registration of events related to an Electronic Invoice:
An event related to an Electronic Invoice is any action or situation related to it, which occurs after the authorization of use has been issued; however, nothing prevents events from occurring before the authorization of use is issued. Every event related to an electronic invoice must be registered in a digital event file.
Among the most common events, we can mention: the authorization of use, the annulment of an electronic invoice, the issuance of a credit or debit note, the acceptance of the invoice by the receiver, the issuance of a credit or debit note, and the acceptance of the invoice by the receiver.
The registration of an event can be verified by:
Who can register an event involving an Electronic Invoice?
The DGI, the PAC, the issuer of the electronic invoice and other persons may register events on an electronic invoice, according to the list of events detailed in the technical data sheet.
Period of time that the taxpayer affiliated to the Panamanian Electronic Invoicing System must keep the electronic files of the Electronic Invoices issued:
The electronic files of the Electronic Invoices issued must be kept until the expiration of the term of limitation of the taxes, according to the type of tax and the current regulation.
Type of tax
Years of limitation
The right of the Tax Authorities to collect: 7 years.
The obligation to pay what is withheld: 15 years
tax on the Transfer of Movable Property and the Rendering of Services (ITBMS)
The right of the tax authorities to collect: 5 years
The obligation to pay: 10 years
Tax on operation notice
Taxes without special limitation period
It is important to point out that as of January 1, 2022, the new statute of limitations terms set forth in the Tax Procedure Code will come into effect, as follows:
On the authorization issued by the Qualified Authorization Providers (PAC):
The PAC is regulated by Resolution 201-0295 of January 20, 2021.
The DGI is the entity in charge of issuing the authorization to legal entities to act as PAC, after their registration, evaluation and qualification.
Any legal entity that aspires to obtain an authorization to operate as a PAC, must submit an application for registration to the DGI, which must be accompanied by a series of requirements, as established by Resolution 201-0295 of January 20, 2021.
The DGI has a term of 10 working days to evaluate the request, also during this process the PAC will submit its technological platform to the tests defined by the DGI, by way of a test and submit evidence of results.
The DGI will have a period of no more than 20 days after the end of the evaluation period to carry out the evaluation process and issue a report with the corresponding conclusions.
If the qualification determines that the application and the platform comply with the requirements, the DGI will proceed in a period not exceeding 20 days to issue, notify and publish on the institution’s website the resolution authorizing it as PAC.
What are the main responsibilities of the PAC?
The DGI may define by resolution, new responsibilities for PACs and may also revoke the authorization of a PAC for non-compliance with its responsibilities.
Undoubtedly, electronic invoicing is here to stay and in a very short time it will be a system that every natural or legal person will have to implement to support their transactions of commercialization of goods or rendering of services.
Are there penalties for not issuing, requiring or keeping electronic invoices or equivalent documents?
Yes, there are penalties for not issuing, requiring or keeping an invoice or equivalent document, which will depend on the type of infraction, whether minor or serious, and may range from US$ 500.00 to US$ 10,000.00 for the first time and up to US$ 25,000.00 in the case of repeat offenses.