Advanced Search

LatinNews Daily - 12 May 2021

Click here for printer friendly version
Click here for full report

In brief: Tax rises ruled out in Panama

* Panama’s economy & finance ministry (MEF) has issued a statement saying that the government led by President Laurentino Cortizo does not plan to increase taxes to raise more funds to make up for the shortfall in tax revenue produced by the coronavirus (Covid-19) pandemic and to meet the various spending commitments the administration has assumed during the public health emergency. Like in countries around the world, the restrictions imposed to stop the spread of Covid-19 have paralysed economic activity in Panama, leading to a sharp fall in the tax take, which dipped by 27% in 2020. Coupled with an increase in emergency government spending in support of businesses and households, this has deteriorated the country’s finances. There have been suggestions that to balance the books the government could increase the general tax on sales and services (ITBMS), akin to a value-added tax. However, this has been ruled out by the MEF, which says that the government will instead focus on increasing the tax take by combating tax evasion. “The government does not plan to increase the 7% ITBMS tax rate… we don’t think it is necessary to raise taxes… we think that the economy can be boosted in other ways”, Publio De Gracia, the head of revenue at the MEF is cited as saying in the statement. De Gracia added that the government’s aim is to reduce tax evasion through the “mass use of electronic billing”.