After being processed in the National Assembly, a long anticipated Tax Reform Package was signed into law yesterday by President Ricardo Martinelli.  Law 8, comprising amendments to the existing statute, increases the transfer tax and property services (ITBMS) from 5% to 7%, and adjusts the income tax for individuals and corporations.

The broader purpose of the package is to reform the tax code in the aim of adopting sound fiscal measures. The new amendments will also allow the government to add an approximate $200 million more in revenues to their investment program in the current period.

Without altering the original principles of the existing tax laws, and by implementing these new provisions, Panama hopes to further adopt the criteria established by Investment Grade Agencies such as Fitch, Moody’s and Standard & Poor’s.  All three agencies are currently reviewing Panama’s investment rating.  In light of the country’s current trend of improved fiscal measures, an upgrade to investment status is expected from each within the near future.

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