At the start of this year, it is essential to keep in mind the tax obligations established by the General Directorate of Revenue (DGI) and the Municipality of Panama. Below are the main responsibilities to avoid penalties:
1. Income Tax Declaration (ISR)
Individuals:
Individuals engaged in independent professions or activities must file their income tax return. The deadline is March 15.
Under Law 280 of December 30, 2021, returns must be endorsed by a CPA if their annual gross income is equal to or greater than B/.11,000.00.
Legal Entities:
All companies must file their income tax return before March 31. The general rate is 25%.
Law 189 of 2020 introduced and modified the special regime for micro, small, and medium-sized enterprises (MSMEs), with a special rate that varies depending on gross income.
In summary, any person or entity with taxable income in Panamanian territory must file an income tax return.
2. Estimated Tax Payments
Companies must make advance payments in three installments during the fiscal year. These payments will later be credited against the tax due.
3. Withholdings
ITBMS (Value Added Tax): Companies that sell taxable goods or services must withhold and report the tax on a monthly basis.
Salaries: Employers must withhold the corresponding tax on their employees' income.
4. Annual Corporate Tax (Tasa Única)
Corporations must pay this annual contribution to maintain their active status. Non-compliance may result in suspension of corporate rights.
5. Notice of Operations
Every business must have an updated notice of operations to legally conduct activities. This tax is calculated at 2% of the company’s stated capital.
6. Municipal Tax for Panama City and San Miguelito
Individuals or legal entities conducting commercial, industrial, or profitable activities within the Districts of Panama and San Miguelito are required to register in the Taxpayer Registry and file an annual sworn declaration of gross income within the first 90 calendar days after the close of their fiscal period. The municipal tax is calculated based on this income and may be paid annually or quarterly. Under Law 280 of 2021, this declaration must be endorsed by an authorized public accountant (CPA).
Penalties for Non-Compliance:
Failure to file the sworn declaration within the established timeframe may result in a fine of B/.500.00 (for both individuals and legal entities) and the potential closure of the establishment until the obligation is fulfilled.
Late payments are subject to a 20% surcharge and an additional 1% monthly interest for each month of delay.
7. Important Dates
March 15: Income tax return for individuals.
March 31: Income tax return for legal entities and Municipal Declaration.
March 31: Payment of income tax due, operations notice, and social security contributions.
June 30: First installment of estimated tax and complementary tax.
September 30: Second installment of estimated tax.
December 31: Fiscal year-end and third installment of estimated tax.
8. Penalties
Failure to comply with these obligations may result in fines, surcharges, and, in severe cases, suspension of operations. Penalties range from B/.100 to B/.1,000.
At C&M Accounting & Tax Solutions, we are here to provide the services you need to avoid surcharges and fines. Contact us at taxsolutions@cedeymen.com.
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