Panama: Companies As Tax Retention Agents

The Association of Banks of Panama has filed a lawsuit alleging that the concept of the tax retention agent is unconstitutional.

Monday, February 10, 2014

The Association of Banks of Panama (ABP) believes that the agreement which empowers the Panamanian municipality to select companies that bill more than $5 million as tax retention agents is unconstitutional. The agreement regulated in 2013 turns firms in auditors and collectors of tax for the municipal coffers.

"Regulation of the rule says that the appointment of tax retention agents will be done gradually and progressively, to this end the Municipal Treasurer will report monthly to the Mayor a list of taxpayers who could be appointed, and they will be notified later" .

"... Bankers say that this initiative contravenes Article 52 of the Constitution, which says literally that "no one is required to pay contributions nor taxes that are not legally established and whose collection is not made in the manner prescribed by law. "
"... Having been created through a municipal agreement, a rule that has a lower rank than the law of the Republic, the model of the tax retention agent is illegal," said attorney Camilo Valdes.

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