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Panama tax agenda 2024-2029

Updated: Feb 26

In the different forums, the presidential candidates have presented their programs for the 2024-2029 Agenda. Many programs have as their central axis increasing social investment with the aim of reducing levels of inequality in the most vulnerable sectors of society.

Panama Tax Agenda 2024 - 2029

Now, achieving a more equitable society requires improving the quality of public services, especially education, health and public safety, among others. To do this, it is necessary to increase State income, in addition to progressively increasing tax collection is essential given that it is not sustainable to maintain the budget via debt in the country over time.

To increase tax revenues, a comprehensive diagnosis of the current tax system is needed and a comprehensive project to modernize the tax system is needed, which has three fundamental pillars: modernize tax regulations, eliminate ineffective tax incentives and strengthen tax administration .

With respect to the modernization of national tax regulations, the codification of tax processes and reform of the income tax, as well as the transfer of goods, furniture and services tax (Itbms) are key factors in the success of the project. The reforms of these taxes would facilitate tax compliance and should not lead to an increase in current rates.

The issue of tax incentives may be one of the most controversial aspects to be addressed in the future. The reports of the International Monetary Fund, the World Bank, the Inter-American Development Bank and the Organization for Economic Cooperation and Development show the inefficiency of certain tax incentives and the rethinking of them; a cost-benefit analysis will also be essential for the redesign of the incentives policy in the country.

The strengthening of the tax administration is another key pillar for the modernization of the tax system, therefore, it is important to continue with the digital tax administration process, modernize the infrastructure of the physical facilities of the General Directorate of Revenue and develop a career plan for civil servants. As well as continue with the massification of electronic invoicing and the strengthening of the large taxpayers office.

Promoting a taxpayer service-based tax administration approach would promote voluntary tax compliance and reduce levels of tax evasion. Although it is true, the fiscal agenda is not at the center of the presidential debate. It is essential for candidates and those responsible for fiscal policy for the next five years to have a fiscal agenda in their government program.

Candidates should present their proposals to citizens on how they will obtain income for social investment. The construction of a consensus between citizens, companies and the State is recommended for the execution of the Fiscal Agenda 2024-2029. The objective of developing an inclusive tax policy will be essential in achieving the objectives of fiscal sustainability in the Panama that we all want.


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