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Proposed Changes in Exoneration of Residential Property Taxes Is Not Without Controversy

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Panama: Exoneration of Property Tax

The government will be presenting a bill in the Assembly that raises the value of housing that can be exempted from payment of property tax up to $120 thousand.

Thursday, August 10, 2017

From a statement issued by the Ministry of Economy and Finance:  

The Ministry of Economy and Finance (MEF) presented a bill that establishes the most significant reduction of property tax in the last 40 years.

The project, approved by the Cabinet Council, establishes the Family Tax Patrimony (Patrimonio Familiar Tributario or PFT in Spanish), through which greater fiscal equity is achieved as well as protection of the family's main and permanent home.

The PFT generates a tax benefit and takes as reference the concept of Family Patrimony established in the Family Code.

The initiative establishes that the main and permanent house of the family, whose value is up to 120 thousand balboas, will not incur property tax nor will it be subject to re-evaluation by the State. Previously the exoneration applied to houses worth up to 30 thousand balboas.

There is also a significant reduction in rates for properties that are not the main family home or that are intended for commercial purposes. 
The reduction involves rates ranging from 0.00% (properties of 30 thousand balboas) to 1.25% (for those whose value is 250 thousand balboas) when it is not the main and permanent dwelling. 

The current property tax regime makes no distinction between family dwellings and commercial properties. 

The current rates are high and establish rates ranging from 1.75% to 2.10%.

 

http://www.centralamericadata.com/en/article/main/Panama_Exoneration_of_Property_Tax

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Panama: Controversy Over Housing Tax Reform

The association of private companies proposes applying a single rate of 0.5% on the surplus over $120 thousand for all property that is a main residence.

Wednesday, August 16, 2017

Panamanian businessmen believe that the bill that the government will be presenting, to raise the value of the houses that can be exempted from the payment of the property tax up to $120 thousand, is not equitable, and argue that the proposed rates are very high.

In this regard, they propose "... applying a single rate of 0.5% on the taxable surplus over US $120,000 for any property that qualifies as a main residence and 0.6% on the taxable surplus over US $30,000 for any other property that may belong to the taxpayer, be it other types of housing, commercial premises or other property".

From a statement issued by the Chamber of Commerce:

The Chamber of Commerce, Industries and Agriculture of Panama, following a preliminary analysis of Bill 509, "That amends articles of the Tax Code in matters related to property taxes and dictates other provisions," appealed to a search for a broad consensus among all sectors impacted, submitted recommendations for consideration and requested respect for legal certainty and commitments.

 

http://www.centralamericadata.com/en/article/main/Panama_Controversy_Over_Housing_Tax_Reform

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