Panama will have a Tax Code

Posted on 2019-03-12

Bill No. 692 that regulates the Tax Procedure Code was approved in the third debate by the National Assembly, it will regulate for the first time the taxpayer-taxpayer relationship based on the application of taxes, becoming the most important tax reform in the history of the Republic of Panama.

The Minister of Economy and Finance, Eyda Varela de Chinchilla explained that Bill No. 692, gives relevance to the rights and guarantees of taxpaying citizens of the country. The moment is constituted in the second opportunity in the Republic (the first attempt was made in 1996) to have a Code that includes the norms and rules for a Rule of Law, which respects the taxpayers.

Bill No. 692 establishes the following aspects:

1. Strengthen the legal security and competitiveness of the country; by establishing the ex officio prescription at 5 years in the national direct taxes and 12 years the national indirect taxes.

2. It will accelerate the process of tax return to taxpayers, since if the General Directorate of Revenues (DGI) will delay more than 1 year with these refunds, it will generate interest in favor of the taxpayer.

3. It will impose binding effects to the opinions of the tax consultations to comply with the legal security of the investors.

4. It will allow to annul the fines that are not the responsibility of the taxpayer by means of exempt grounds of responsibility.

5. Provide objectivity and speed to resolve the reconsideration resources that will be presented before the new Administrative Tax Judges assigned to the DGI.

6. Adopt alternative means of resolving disputes such as Tax Arbitration once the governmental channel is exhausted, for cases such as transfer prices, double taxation treaties and additional settlements for amounts over 100 thousand balboas.

7. The Taxpayer Advocate is created as an institution to defend the rights of taxpayers.

In addition, Bill No. 692 is constituted as a pillar in the country's competitiveness, whose legislature will be strengthened and will equalize jurisdictions that are Panama's jurisdiction, thus strengthening the Nation's efforts to remain isolated from measures international discriminatory, such as the list of the International Financial Action Task Force (FATF), which Panama is expected to review in the near future.

"All the countries of the region have been characterized by adopting the good practices of the taxpayer-taxpayer relationship, highlighting the rights and guarantees of the taxpayers according to two fundamental principles, equality and the principle of legal security, without limiting the faculties and powers of the Tax Administration represented in the DGI "Minister Varela de Chinchilla described.

The Bill No. 692 was revised by different actors of the public and private sector, with the objective of agreeing on the best proposal of the Tax Procedures Code of the region, positioning the country as a facilitator of trade and business in attention to the item that represents the services provided by the DGI, since the provision of effective and efficient public services are also a task of this entity, in addition to the collection and inspection.

The proposal of the Tax Procedure Code will regulate, the taxpayer-taxpayer relation to the application of taxes and as indicated in article 1180 of the Fiscal Code, to those of fiscal matters (non-tax) the Procedure will continue to be applied. Ordinary Fiscal of the Fiscal Code.

Source: ANPanama