In order to give individuals and corporations the opportunity to catch up with this obligation interrupted by the pandemic, authorities extended until July 17 the deadline for declaring income tax payments.
The term to cancel this commitment with the Panamanian State expired on March 31, 2020, and an extension was added until May 30, given the circumstances with the effects of covid-19, the difficulties presented by many companies and the time needed by public accountants to submit such statements, explained the representatives of the General Directorate of Revenue (DGI).
On average, companies in the region pay 45.8% tax on profits, while companies in OECD countries pay 41%.
From the study Evolution of the fiscal situation in Central America, by the Federation of Chambers of Commerce of the Central American Isthmus (FECAMCO):
FECAMCO has carried out a study with the objective of showing the fiscal situation in Central American countries and raising awareness in governments about the efficient use of taxes that are collected from the payment of citizens to guarantee solvency of the states.
The two countries have signed an agreement to avoid double taxation of income in the commercial use of ships and aircraft.
From a statement issued by the Ministry of Foreign Affairs:
The Republic of Panama and the Federal Republic of Germany, signed an agreement to avoid double taxation with respect to taxes on income, and with respect to international commercial use of ships and aircraft.
Starting July 25 all tax returns must be made through the new digital system, e-Tax 2.0.
The resolution published in the official newspaper La Gaceta states that"... all taxpayers and users of the computer system e-Tax Tax 2.0 are given notice, that the only way to submit declarations is through the internet."
At the end of the December 31, deadline to qualify for the current moratorium, a 10% surcharge will be incurred by those behind in the payment of taxes on income or property.
According to some taxpayers this measure represents a "... Disguised tax increase, which contradicts the promise made by President Juan Carlos Varela not to raise taxes, despite the existing fiscal deficit.
The asymmetry of investment flows makes the application of the concept of world income inevitably generates more revenue to the states of powerful economies than those of small ones.
In his opinion piece in Elfinancierocr.com, Manrique Blen points to the difficulties that countries with small economies face when they sign double taxation treaties, as, depending on the characteristics of the signed agreements, they can stop receiving tax revenues that they could have received had they not joined the treaty.
A law has been approved that repeals articles 2 and 3 of Act 120 of 2013 and restores the effect of Article 694 of the Tax Code relating to the principle of taxation of the income.
From a statement by the National Assembly:
With 45 votes in favor, 2 against and 0 abstentions, the plenary of the National Assembly approved on its third reading Bill 694, which repeals Articles 2 and 3 of Act 120 of 2013 and restores the effect of Article 694 of the Tax Code regarding the principle of taxation of income.
Approval has been given to repeal two provisions of the law requiring any natural or legal person in receipt of any taxable income outside the country to pay taxes.
From a press release from the Presidency of Panama:
The Cabinet Council has approved a resolution which repeals sections 2 and 3 of Law 120 of December 30th 2013, which stated that any natural or legal person in receipt of any taxable income outside of Panamanian territory must pay taxes.
Volume in the Panama Stock Exchange is being driven by the fact that properly registered shares and bonds do not pay income tax.
Capital.com.pa reports that "the stock market in Panama traded $512.2 million in January 2013, a figure which much higher than that negotiated in the months of January in the last seven years, with the exception of 2011 ".
The National Assembly has approved on its third reading an agreement with the State of Israel, to avoid double taxation and prevent fiscal evasion with respect to taxes on income.
A statement from the National Assembly of Panama reads:
Third debate held on agreements to avoid double taxation and tax evasion
The full National Assembly approved on its third reading Bill No.
The Office of Administration agreed with the Chamber of Commerce in pointing out the unconstitutionality of the change in the method of paying income tax.
According to the Administration Office of Panama, the way that the regulation is applied does not meet public order reasons.
The Ombudsman considered that one of the five sections of Act 52 sued by the business association for being unconstitutional, does not comply with the provisions of the constitution.
In addition to a return to the system of estimated income, modifications have also been made to preferred shares, private foundations, and import taxes.
A bill which will shortly be submitted by the Ministry of Economy and Finance (MEF) contains changes "related to Monthly Advance Income Tax (AMIR), preferred shares, the flat tax for private foundations and taxes on import of electronic equipment and related supplies", said the that head of the Directorate General of Revenue (DGI), Luis Cucalón, according to Capital.com.pa.
Given the failure of the monthly payment system, income tax payments will be made in three installments a year and will be calculated using estimates.
According to an article in Prensa.com "With this move the government recognizes the failure of an unwieldy mechanism and that has not generated the expected revenues. Tax consultant Osvaldo Lau said that ‘the aim was to improve cash flow, but the exercise failed, because the absolute value of tax revenues did not meet expectations. '"
Employees with annual revenues exceeding $11,000 can deduct from their income tax payments medical bills and interest payments on non preferential mortgages.
Declarations for extra expenses for consumption of medicines and health services and the payment of interest on a mortgage loan, other than preferred ones, on a main residence within the Republic of Panama, will result in "...