Panama’s Flat Tax
Tuesday, February 24, 2009 13:35
Presidential Candidate Ricardo Martinelli is proposing a flat rate tax in Panama, which is being met by a variety of mixed responses. The proposal involves reducing the company tax rate from 30% to a flat rate of between 10 and 15%. However economists fear that this flat tax will lead to an increase in the sales tax rate within Panama, which has remained at 5%for the last 30 years. Martinelli’s tax proposals and reforms include the limitation of tax deductions, and the elimination of grants and tax exemptions, including that of the banking sector.
There are further concerns that such a tax reform can be ruled unconstitutional according to the Constitution of Panama. Economists seem to be against the idea of such tax rate adjustments and alterations, whilst the possibility of such a move has been hailed by the business sector as an initiative that will make the entire taxation process a lot easier to manage, from a business perspective.
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