Panama: Change in Income Calculation

Ricardo Martinelli, president-elect of Panama, announced changes to Income Tax Calculation (CAIR), which is highly questioned by the business sector.

Monday, May 4, 2009

CAIR implies that the income tax of natural and legal persons is determined through a double calculation, with taxes being paid on the higher figure.

The 2005 tax reform introduced this system, looking to establish a minimum income tax contribution in Panama to close some tax evasion windows. In setting the tax base as the total gross taxable income without taking into account any deduction or the results of business operations, this system seeks to incorporate an objective or presumed estimation, separating itself from the direct estimate that traditionally had been used in Panama.

The article in stated that "entrepreneurs have questioned this law which they say could lead to bankruptcy for many companies."

More on this topic

More Changes to Panama’s Tax Code

July 2012

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

El Salvador and the Income Tax Reform

January 2012

From 1st January reforms to the current income tax have come into force, affecting declarations filed in 2013, which correspond to 2012 revenues.

Reporters Daniel Trujillo and Velasco Sury writing for the newspaper El Mundo, explain the main changes introduced by the reform.

Panamanian Banks Will Pay 50% More Taxes

November 2009

The effective income tax rate paid by banks (known as ISR in Spanish), could increase to somewhere between 14% and 15%.

Eduardo Lee, who represents the banking establishment in this negotiation with the State, submitted a proposal in which banks will have to distribute costs proportionally to how much they earn from their domestic and foreign operations.

New law in Guatemala to govern income tax, rates and controls

June 2008

The Executive Branch of government has proposed a lengthy new income tax law.

Under the proposal, the changes to the income tax structure would affect the general income tax, optional taxes and local taxes. It would create levies on dividends from capital and new limits on deductible expenses.

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