Sunday, January 05, 2014

Panama Cabinet votes to revoke Law 120 of 1973 and reaffirm territorial taxation

The Legislature must now approve the bill, followed by its publication in the Official Gazette.
The Panama Cabinet approved a bill to revoke Law 120 of 2013 which had eliminated tax benefits to Panama companies and individuals performing transactions which take affect outside of the country.

The Presidency issued 2 press release which we transcribe verbatim.

See also  
Panama Administration will continue local-source taxation

Government reiterates compromise with tax territoriality

Thursday, January 02, 2014
The National Government, through Cabinet Council held on January 2nd, 2014, approved a Cabinet Resolution authorizing the Secretary of Economy and Finances to present to the National Assembly a Bill that revokes articles 2 and 3 of Law 120 from 2013 and restitutes article 694 of the Tax Code.  This Law will be of public order and has retroactive effects to December 30th, 2013.
The project will be presented on Monday, January 6th when the National Assembly retakes their regular period of sessions.
With this step the National Government reiterates their historic compromise to keep the principle of territoriality at the source, for purposes of calculating Income Tax applicable to natural and legal people that operate inside the Republic of Panama´s territory.

The Cabinet Council revokes law establishing taxable income outside Panamanian territory

Thursday, January 02, 2014
  • The disposition has retroactive effects since December 30th, 2013.
The Cabinet Council approved a resolution that revokes articles 2 and 3 of Law 120 from December 30th, 2013, establishing that all natural or legal people that received a taxable income outside Panamanian territory would pay taxes.
Through the aforementioned resolution, approved in an Extraordinary Cabinet Session, article 694 of the Tax Code is completely reestablished stating that: “it is object of this tax the taxable income produced, in any way, inside the territory of the Republic of Panama, regardless of the place received”.
This disposition highlights that this Law is of public order and is retroactive to December 30th, 2013 and will take effect once it is enacted.
According to the explanation of motives, this measure was taken “once the National Government is aware that the implementation of the world tax regimen in regards to Income Tax requires more discussion and debate, and that such modification changes completely the tax outlook of the country”.


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