The increase in the supply of goods and services through digital platforms from abroad causes in Panama a considerable loss of revenue to the national treasury.
This is due to the absence of mechanisms that allow these transactions to be taxed by the General Revenue Directorate (DGI). This situation has led to the resumption of the debate on the taxation of digital platforms.
This debate has been resumed with the note published by the Ministry of Economy and Finance on the project to implement the Tax on the Transfer of Movable Goods and Services (Itbms) to non-resident digital platforms, with the purpose of increasing tax collection and decreasing the levels of tax evasion in this segment of taxpayers.
It is important to highlight that the "Itbms" is an indirect tax levied on the consumption of goods and services in the Republic of Panama. According to the provisions of the Fiscal Code the "Itbms" is borne by the final consumer who would be the taxpayer of this tax. Therefore, it is understood that the implementation of the "Itbms" to digital platforms outside Panama would not be creating a new tax.
However, the tax community is waiting for the collection mechanisms that the DGI will implement to collect the "Itbms" of transactions in Panama using foreign digital platforms. The community is wondering what will be the scope of application, the taxable persons, the transactions subject, the registers of suppliers, the rates, the responsibility of the payment intermediaries, the settlement terms, and the penalties, among other aspects.
The DGI will initiate a pilot program of voluntary compliance with the "Itbms" for foreign digital platforms, which, if carried out, would represent a significant advance in terms of tax collection for the country. In addition, this would represent an action of protection to the national economy by equalizing the tax conditions for foreign and resident suppliers, since currently only resident suppliers are subject to the payment of the "Itbms", and foreigners omitted.
The compliance strategies being promoted by the "DGI" in terms of "Itbms" to digital platforms, go in the right direction according to international standards of taxing goods and services offered by non-resident digital platforms in the destination jurisdiction. This is known in the doctrine as the "destination principle".
Finally, non-resident digital platforms are carefully following these proposals of the "DGI" in order to comply with their tax obligations. The implementation of the "Itbms" to non-resident digital platforms is evidence of the strengthening of the Panamanian tax system.