Panama buries law to tax foreign income

A LAW REPEALING changes to Panama’s tax laws that would have hit foreign residents and businesses got unanimous third reading in the National Assembly on Wednesday, January 8.

The proposal was endorsed unanimously by both the government and opposition.

The modification to the tax law would have extended liability for all Panama residents to any income earned outside the country. This would have negatively impacted Panama's financial services sector. But for some the damage has already been done with the element of uncertainty thrown into the mix when foreign investors try to understand how a law that had been in place for over 100 years, could be changed, pass through the assembly be signed off by the president and promulgated in the Gazette with no checks and balances.
Blame for the tax changes were initiatives of National Authority of Public Revenue Director Luis Cucalón, who last week announced, via his Twitter account, that the reforms were a mistake. But neither the president of the Assembly, nor President Ricardo Martinelli. Nor the Assembly members, appear to have understood what they were rubber-stamping.