General Tax Amnesty.
Through Law 143 of March 20, 2020, Law 99 of October 11, 2019, which grants a general tax amnesty for the payment of taxes, and Law 76 of February 13, 2019, regarding the Code of Tax Procedure were amended, and other provisions were issued.
What is the general tax amnesty?
It consists in a write-off of:
Covered under the concept of taxes are:
The following are eligible for the tax amnesty period for taxes generated and defaulting on payment as of June 30, 2019:
Not eligible for the tax amnesty are:
From March 20, 2020 to June 30, 2020, the deadline to present to the DGI, exempt from their respective fines, the forms that had to be presented until February 29, 2020, corresponding to:
Only the forms that are presented as of the entry into force of this Law will be considered exempt, and it is recognized that they will not cause a fine to the extent that these taxpayers comply with the conditions and commitments of the aid package and economic stimulation issued by the state of emergency decreed because COVID-19 or who are taxpayers who maintain operations. Conditions that must be verified by the DGI.
The tax that results from an update and / or income tax return and that corresponds to periods prior to June 30, 2019 must receive the benefits of the Amnesty Law, applying them in the statement of account, according to the period that was caused, avoiding the additional debit that is established now without giving the correct treatment regarding the period in which they were caused. Even if the taxpayer has omitted some taxes, the debt that he had until June 2019 can be paid in full or benefit from a payment arrangement.
The taxpayer, who, at the time of availing himself of the benefits of this Law, has a payment arrangement, may withdraw it and must sign a payment agreement, with a down payment of 25% of the nominal tax due, at the time of the signing of the payment agreement, subject to the following conditions:
Availing to the benefits of this Law will be automatic when delinquent taxpayers have made a payment to settle the debt that is maintained with the General Directorate of Revenue.
The DGI may declare ex officio that the tax debts paid or paid by the taxpayer from its entry into force have availed of the benefits of this Law.
All those delinquent balances that are not canceled in the tax amnesty period or when their respective payment agreement expires, will be subject to the interest, surcharges and fines provided by law.
In order for the taxpayer to qualify for the benefits of the tax amnesty, the DGI must be notified, either in person or through a representative, or via the web (e-Tax 2.0).
The DGI must declare, upon request of an interested party, that the tax debts existing in the current account of the taxpayers as of June 30, 2019, which are granted amnesty, are prescribed.
It is important to note that, during the term of the tax amnesty, the late declaration of improvements will not cause a fine, provided that the public deed on the declaration of new improvements built is filed before the Public Registry. The aforementioned will be valid until December 31, 2020.
Finally, this Law modifies Law 76 of 2019 related to the Tax Procedure Code in the following aspects:
The Tax Procedure Code will take effect on January 1, 2021, except for articles 1, 2, 3, 4, 5, 6, 9, 11, 65, 78 and section 3 of article 88, articles 100, 101, 127, 128, 208, 259, 262, 273, 284, 285, 286, 287 and 288 and section 11 of article 324, which will take effect on June 20, 2020.
Any new amnesty or tax moratorium is suspended until December 31, 2024.
Whereby Executive Decree 553 of November 19, 2019, which regulates Law 99 of October 11, 2019 (Law that grants general tax amnesty for the payment of taxes) is amended.
Amnesty period. In the case of payment of taxes, it may be made from October 15, 2019 until June 30, 2020.
The taxpayer can avail of a payment arrangement between the months of October 2019 to June 2020, paying 25% or more at the time of signing it, and may cancel it until December 31, 2020.
Late reporting or omitted tax returns. May be filed no later than December 31, 2019 without a fine.
Beginning on March 20, 2020 until June 30, 2020, late reports or tax returns which should have been submitted until February 29, 2020 may be submitted to the DGI, and will be exempt from fines, provided that comply with the formalities.
Late Declaration of improvements and prescription requests. May be carried out from October 15, 2019 until December 31, 2020.
Procedure for availing of the tax amnesty. It will be automatic when delinquent taxpayers have made a payment aimed at paying off the debt that remains outstanding with the DGI.
In the case of payment arrangements, the request must be submitted via the web (Form 752).
Payment arrangement agreements signed until February 29, 2020, may be canceled until December 31, 2020.
New payment arrangement agreements may be signed until June 30, 2020, and may be canceled until December 31, 2020.
To sign a payment arrangement agreement, the taxpayer must pay 25% of the nominal and delinquent taxes.
In the case of late filings, those taxpayers who have been affected by COVID-19 and submit between March 20, 2020 and June 30, 2020, the forms that they had to submit until February 29, 2020 to the DGI, are benefited with the exemption from the payment of fines. This includes:
Present withdrawal of the pending processes that the taxpayers have for cases of additional settlements, ex officio liens, requests for non-application of CAIR or any other payment request that is in dispute in the DGI and make the payment of all the due within the amnesty period.
In cases of prescription of taxes, the application must be submitted by the taxpayer, via the web, so that the prescription of the tax debts prescribed in the current account as of June 30, 2019, is declared, provided that the total amount owed is paid within of the amnesty period or upon expiration of the payment arrangement.
Of the Amnesty Payment Arrangement Agreements. Are those agreed with the sole purpose of availing the benefit of tax amnesty and they may be agreed and will take effect, as long as:
Tax Measures- Executive Decree 251 of March 24, 2020.
Through which tax measures are adopted to alleviate the economic impact resulting from the State of National Emergency. The State of National Emergency was declared by Cabinet Resolution No. 11 of March 13, 2020.
That through Law 76 of February 13, 2019, which adopts the Tax Procedure Code, recently amended by Law 134 of March 20, 2020, Articles 9 and 78 of this Code come into force, by which the Executive Branch may suspend, in whole or in part, in the event of a legally declared State of Emergency, the application of taxes of any type or kind, deferring its payment temporarily throughout the national territory.
During the term of the State of National Emergency, a term of one hundred twenty (120) calendar days, counted from March 20, 2020, is granted for the payment of taxes that are incurred or must be paid during said period and that are the responsibility of the General Directorate of Income (DGI) of the Ministry of Economy and Finance (MEF), without causing interests, surcharges and fines.
What taxes are subject to the aforementioned benefit?
Are there exceptions to this benefit?
Yes, those whose obligation arises from the quality of withholding agent, namely:
Is the term for filing the income tax returns modified?
Executive Decree 251 of March 24, 2020, grants a definitive term for the filing of the income tax return corresponding to the 2019 fiscal period, of natural or legal persons, until May 30, 2020.
As a consequence of this measure, the term of extension is eliminated.
Likewise, Executive Decree 251 of 2020 authorizes the presentation of documents that serve as evidence or requirements for procedures and requests before the DGI, electronically, through the procedures that the entity will enable for this purpose.
Filing of the estimated income tax return of the income that will be obtained in the following year.
By reason of the State of National Emergency, taxpayers may determine for the year 2020, the estimated tax to be paid, an amount not less than 70% of the taxes incurred in their tax returns for the 2019 fiscal period, without said estimate being subject to investigation or verification by the DGI.
The tax thus estimated must be paid in two (2) installments during the fiscal period 2020, the first no later than September 30, 2020 and the second no later than December 31, 2020.
The term is extended for one (1) more year for the income tax exoneration to taxpayers who meet the conditions provided by Law 33 of July 25, 2000 (SMEs), to the extent that they have expired during the fiscal period 2019 or fiscal period 2020.
During the term of the State of National Emergency, the DGI is authorized to take the necessary measures with the aim of guaranteeing that taxpayers comply with the reporting obligations required by current laws.
Other benefits during the term of one hundred twenty (120) calendar days:
If during the State of National Emergency, the capacity of the taxpayers to comply with their reporting obligations is affected, the DGI is authorized to issue a resolution, to postpone the terms of presentation of the different tax compliance declarations and reports, without the generation and payment of fines.
Who will not be able to take advantage of the benefits of this Executive Decree 215 of March 24, 2020?
Taxpayers who are being prosecuted for administrative tax evasion or criminal tax fraud.
(4) Municipal Agreement 76 of March 24, 2020.
By which an extension is granted for the payment of municipal taxes. This Agreement 76 applies to all taxpayers of the Municipality of Panama, whether natural or legal persons.
What taxes are subject to the aforementioned benefit?
All taxes corresponding to the months of March, April, May and June 2020, may be paid until June 30, 2020, without the respective surcharges and interest.
José Agustin Preciado