If International Companies do not Demonstrate Actual Operations in Panama, those Companies will Pay 15% Tax
The reform aims to require companies operating in Panama to justify their presence for tax purposes.
The tax code reform presented by the Minister of Economy and Finance, Felipe Chapman, to the National Assembly incorporates the concept of economic substance. He stated that the aim is to require multinational companies and other international economic agents to demonstrate that they actually conduct business in Panama for tax purposes. The reform proposed by the MEF will create a new Chapter IA in the Tax Code, called “Rules of Economic Substance for Passive Income”, which requires companies to demonstrate a real economic presence in Panama to maintain the favorable tax treatment of this income. The draft reform to the ‘Tax Code’ tightens controls on multinational groups to prevent them from using the country to evade or reduce taxes.
