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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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Exonerations and Taxes

The Panamanian private sector is concerned about the "change in the rules of the game" which will occur with the elimination of some exemptions in the bill that reduces property tax.

Friday, August 25, 2017

From a statement issued by the Chamber of Commerce, Industry and Agriculture:

Bill 509, which modifies articles of the Tax Code in matters of property taxes and dictates other provisions, although it offers important adjustments of the property tax rate, has generated a lot of debate, doubts and concern among citizens and the private sector.

We consider that the term "Tributary Family Heritage" to be confusing and may even be exclusive, therefore we suggest changing it to "principal residence of the natural person or the final beneficiary of a legal person", to ensure the benefit goes to the principal residence of any taxpayer. On the other hand, since exemptions have been eliminated, the proposed tax rates are very high. We have proposed applying a single rate for main residences and another one for other properties, be they housing or commercial premises.

 

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

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Great News to Property Owners – Property Tax Law Approved

property-tax-1.jpg

This huge and a real game changer for property owners in Panama.  If you own a primary residence with a registered value of $120,000 or less, you pay no real estate taxes – Forever!!!  Plus, any amount from $120,000 up to $700,000 will be taxed at only one half of one percent.  That means that an owner of a home that is his primary residence,  it has a registered value of say $300,000 and it no longer enjoys a real estate tax exoneration, then he will pay only $900 per year in real estate taxes.  Prior to this new law, he would have to pay almost $6,000 per year!

From a press release by the Assembly:

The regulations mainly extend the coverage of tax exemptions to residences that do not exceed 120 thousand balboas and those that exceed this price will pay less taxes. Money collected from this tax will be given to municipalities to secure resources for decentralization.

Having been established, the progressive rate combined with the tax benefit known as family property tax or the main dwelling will be: 

1.  0.00% on the taxable base from zero balboas up to B / .120,000.00. 
2.  0.5% on the taxable base over B / .120,000.01 and up to 700 thousand.
3.  0.7% on the taxable base over 700 thousand balboas.

The combined progressive rate on commercial real estate, industrial, other residences and others is as follows:

1.  0.00% on the taxable base from zero balboas up to B / .30,000.00. 
2.  0.60% on the taxable base over B / .30, OOO.01 and up to B / .250,000.OO. 0.80% on the taxable base over 250 thousand and up to 500 thousand.
3. 1% on the taxable base over 500 thousand.

Read full release (in Spanish).

 

http://panamaadvisoryinternationalgroup.com/blog/news-from-panama/great-news-property-owners-property-tax-law-approved/

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Have to wonder which level of taxation referred to in the legislation will be applicable to homeowners who have their principal residence registered within a corporation.

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Property Tax Law Approved

The law on property tax finally approved by the Assembly of Panama exempts from payment housing whose value is less than $120 thousand.

Tuesday, September 19, 2017

The regulations mainly extend the coverage of tax exemptions to residences that do not exceed 120 thousand balboas and those that exceed this price will pay less taxes. Money collected from this tax will be given to municipalities to secure resources for decentralization.

Having been established, the progressive rate combined with the tax benefit known as family property tax or the main dwelling will be: 

1.  0.00% on the taxable base from zero balboas up to B / .120,000.00. 
2.  0.5% on the taxable base over B / .120,000.01 and up to 700 thousand.
3.  0.7% on the taxable base over 700 thousand balboas.

The combined progressive rate on commercial real estate, industrial, other residences and others is as follows:

1.  0.00% on the taxable base from zero balboas up to B / .30,000.00. 
2.  0.60% on the taxable base over B / .30, OOO.01 and up to B / .250,000.OO. 0.80% on the taxable base over 250 thousand and up to 500 thousand.
3. 1% on the taxable base over 500 thousand.

Read full release (in Spanish).

 

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

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On 9/24/2017 at 9:34 AM, Moderator_02 said:

For "other residences", here is the spanish version: 2. 0.60% sobre la base imponible excedente de B/.30,OOO.01 hasta B/.250,000.OO.

Not sure what other residences are. Condos?

Edited by Pantah
misread the english version initially

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Primary residence

.05%  the taxable base over B / .120,000.01 and up to $700,000

You may be looking at 

The combined progressive rate on commercial real estate, industrial, other residences

Edited by Keith Woolford

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Here are the final details of the new property taxation law as approved yesterday by President Varela.

President Varela sanctions law that reduces the Property Tax

image.thumb.png.1e22f8a15c741f998a078fbd2adbaa38.png

The President of the Republic, Juan Carlos Varela, today sanctioned the Law that proposes the most important integral reform of the Property Tax in the last 40 years and establishes a greater fiscal balance, which benefits the owners.

Thanks to this law, as from the Fiscal Year 2019 there will be a general reduction in the rates of this tax protection to the main house and the Tributary Family Patrimony, while the regime of exemptions that modifies the regime of exonerations and will improve the mechanisms of recollection.

"The National Government has dealt decisively and successfully a very important issue. The Law that we sanction today is of benefit to all Panamanians and has been made possible through dialogue and the participation of different sectors of society,” said the President.

The Law establishes the following rates of the Property Tax for the Main Housing and the Tributary Family Patrimony:

  • 0.0% to 120 thousand balboas
  • 0.5% from 120.01 thousand balboas to 700 thousand balboas
  • 0.7% from 700.01 thousand balboas onwards

On the other hand, for commercial properties, industrial, second homes and other, the new Law stipulates the following rates:

  • 0.0% up to 30 thousand balboas
  • 0.6% from 30.01 thousand balboas to 250 thousand balboas
  • 0.8% from 250.01 thousand balboas to 500 thousand balboas
  • 1.0% from 500.01 thousand balboas onwards

The norm recognizes the exemption of the Property Tax for "first purchase" of a house, whether new or second, that is registered as main house or Tributary Family Patrimony for 3 years, and which value is between 120.01 thousand to 300 thousand balboas.

Additionally, and temporarily, a moratorium period for the payment only from Property Tax caused until 31 August 2017, which could be paid, without surcharges or interest, in full, until 31 December of this year.

The process of moratorium of the payment of the Property Tax can be used by the taxpayers throughout the country, either through the Internet on the DGI website or by approaching the different Provincial Revenue Administrations of the DGI. In both cases, it is necessary for the taxpayer to have electronic e-mail, Unique Taxpayer Registry (RUC) and Tributary Identification Number (NIT).

DGI officials have been trained to handle the tax payment processes in this moratorium period.

https://www.presidencia.gob.pa/en/News/President-Varela-sanctions-law-that-reduces-the-Property-Tax

Edited by Keith Woolford

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On November 7, two local prominent attorneys, Juan Contreras and Lourdes Miranda, will speak at the BCP Tuesday meeting. They will explain all of the ramifications of the new law as well as compare different scenarios under the old and new laws.

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Panama: Property Tax Law Sanctioned

The three year exemption from paying property tax is recognized for a "first purchase" of a house that is registered as a main residence and a moratorium of the tax has been established until the end of the year.

Wednesday, October 18, 2017

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

The President of the Republic, Juan Carlos Varela, today passed a Law that proposes the most important integral reform of the Real Estate Tax in the last 40 years and establishes a greater fiscal balance, which benefits owners.

Thanks to this Law, starting from Fiscal Year 2019 there will be a general reduction in the rates of this tax, improved protection of a main residence and to the Family Property Tax, while the exemption regime will be modified along with the collection mechanisms.

Read full release (in Spanish).

 

https://www.centralamericadata.com/en/article/main/Panama_Property_Tax_Law_Sanctioned

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