Industry News

PANAMA: Debates begin on property tax

Wednesday, 13 September, 2017

Panama’s Ministry of Economy and Finance (MEF) has opened the first debate on Bill 509, which concerns property tax reform – specifically, the proposal to give tax exempt status to housing with a value of less than USD120,000.

The Bill was announced on August 9, 2017, with the intention of increasing the range of housing to which property tax does not apply. Currently, the exemption applies only to housing valued at less than USD30,000.

Properties that would fall under the originally proposed reform are those that constitute the main home of a family, defined as citizens who fall under the Family Code (Codigo de la Familia). However, several businesses have expressed concerns that this distinction is unfair, suggesting that it favours those with children.

In a statement, the Panamanian Association of Business Executives (APEDE, Asociación Panameña de Ejecutivos de Empresa), said that the reform “must contemplate a bigger reduction of the tax rate applicable to all properties that constitute the main dwelling, regardless of whether those who live there conform to the notions of what constitutes a family.”

Consequently, the first debate resulted in a proposed modification that would extend the tax reform to unmarried couples or even single residents.

Homeowners with property exceeding USD120,000 in value would also benefit under the proposed new tariffs, as they would pay only the excess cost of ownership. Those owning homes valued between USD120,001 and USD250,000 would pay 0.6 per cent on the tax base surplus of USD120,000, while owners of homes exceeding USD250,000 in value would pay 0.9 per cent on the surplus.

Minister of Economy and Finance, Dulcidio De La Guardia, has described the Bill as “a project that permanently and indefinitely protects the family home.”

The Bill is expected to take effect in 2019.

Sources

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