Abstract
Panama’s extensive trade and financial linkages make it vulnerable to adverse external shocks, and this would have a sizable impact on Panama’s real activity. In the absence of monetary policy, macroprudential policy tools could usefully complement microprudential tools. A macroprudential supervisory body must possess the ability or power to collect and analyze firm-, market-, and global-level data to detect risks before they develop into full-blown crises. This study analyzes Panama’s tax structure, performance, and administration in order to identify priority areas for further strengthening
Panama: Taking Stock of a Decade of Tax Reforms1
A. Introduction
1. Over the past decade Panama has carried out three tax reforms (2002, 2005 and 2009). While an overarching objective of all reforms was the creation of a buoyant, elastic, and equitable system as a whole, political economy constraints did not allow the introduction of many changes at once. Thus, every administration—Moscoso (1999-2004), Torrijos (2004-09), Martinelli (2009-14)–assigned priorities to certain areas (Annex I).2 Overall, the reforms made the system more progressive as they allowed for a combination of tax reductions (e.g. on the income tax side) and increases (e.g. VAT), and broadened the tax base.
2. This study analyzes Panama’s tax structure, performance, and administration in order to identify priority areas for further strengthening. In particular, the paper (i) takes stock of the tax reforms introduced during the past decade; (ii) examines the tax structure and performance—in comparison with neighboring or income peer group where possible; and (iii) identifies tax administration challenges and areas for further strengthening. Although the reforms did succeed in raising Panama’s tax-to-GDP ratio, they nonetheless fell short of objectives, and Panama still lags its income peer group with respect to tax pressure and effort. While buoyancy increased with the pickup of GDP growth, tax-to GDP ratios were still below the countries at the same level of economic development. While some of Panama’s tax rates remain below peers, efforts to increase tax revenue going forward should rather focus on continuing to reduce exemptions and strengthening tax and customs administration.
B. Reforms, Tax Structure and Performance
Reform Objectives
3. Increasing the yield and buoyancy of the tax system through equity-enhancing tax policies was a major objective of the successive reforms in Panama. The reforms also sought to raise the system’s elasticity to sustain a permanent revenue performance; and improve its efficiency. Reducing the personal income tax rate was intended to make the system more progressive on the income side. To reduce tax evasion, all businesses, including banks, above a certain size were brought into the tax net through an alternative minimum income tax (Annex 1). Selected activity in the Colón Free Zone started to be taxed. Direct taxes on business were raised overall, while the personal income tax rate was decreased. Indirect taxes have seen the most change with the widening of the VAT base and increase in the rate. Some effort was made to reduce exemptions but a few were actually introduced in addition to the existing ones.
4. The revenue gains from Panama’s tax reforms compare favorably with the region, but Panama still has one of the lowest tax-to-GDP ratio. Several countries in the region undertook tax reforms over the past decade (Annex II, Table 1, and Figure 1). Noticeable improvements in tax ratios could be observed mostly in Nicaragua (although it is a lower-income country). While Panama’s tax revenue intake improved by about 3 percentage points over the past decade, to about 12 percent of GDP, Panama’s tax-to-GDP ratio is one of the lowest in the region, and well below the median for upper-middle income countries. This is partly explained by a high share of non-tax revenues in Panama (representing about 36 percent of total revenue), mainly from the Panama canal, as well as revenues and dividends from other public agencies and semi-public enterprises (Figure 1 and Annex II, Tables 2 and 3), which bring the total revenue-to-GDP closer to their peers.
Top Corporate and Personal Income Tax Rates for OECD Countries, Latin America and Central America
After the March 2010 tax reform at end of 4 year adjustment period.
Excludes Panama.
Top Corporate and Personal Income Tax Rates for OECD Countries, Latin America and Central America
| CIT | PIT | |
|---|---|---|
| Panama 1/ | 25.0 | 25.0 |
| Latin America Average 2/ | 27.5 | 27.7 |
| Central America Average 2/ | 28.5 | 27.7 |
| OECD average | 24.5 | 36.7 |
After the March 2010 tax reform at end of 4 year adjustment period.
Excludes Panama.
Top Corporate and Personal Income Tax Rates for OECD Countries, Latin America and Central America
| CIT | PIT | |
|---|---|---|
| Panama 1/ | 25.0 | 25.0 |
| Latin America Average 2/ | 27.5 | 27.7 |
| Central America Average 2/ | 28.5 | 27.7 |
| OECD average | 24.5 | 36.7 |
After the March 2010 tax reform at end of 4 year adjustment period.
Excludes Panama.
Panama and Peer Groups: Tax Revenue
Citation: IMF Staff Country Reports 2013, 089; 10.5089/9781484344477.002.A003
Sources: National Authorities, staff calulations.1/ Albania, Argentina, Belarus, Botswana, Brazil, Bulgaria, Colombia, Jamaica, Lithuania, Malaysia, Namibia, Peru, Romania, Russia, South Africa, Turkey, Uruguay.
Panama and Peer Groups: Tax Revenue
Citation: IMF Staff Country Reports 2013, 089; 10.5089/9781484344477.002.A003
Sources: National Authorities, staff calulations.1/ Albania, Argentina, Belarus, Botswana, Brazil, Bulgaria, Colombia, Jamaica, Lithuania, Malaysia, Namibia, Peru, Romania, Russia, South Africa, Turkey, Uruguay.Panama and Peer Groups: Tax Revenue
Citation: IMF Staff Country Reports 2013, 089; 10.5089/9781484344477.002.A003
Sources: National Authorities, staff calulations.1/ Albania, Argentina, Belarus, Botswana, Brazil, Bulgaria, Colombia, Jamaica, Lithuania, Malaysia, Namibia, Peru, Romania, Russia, South Africa, Turkey, Uruguay.Reform Results
Revenue Composition
5. Tax revenue as a share of total revenue rose by 10 percentage points to 63 percent between 2001-11 (Figure 1 and Annex II, Table 3). The share of income tax increased by 3 percentage points, while the personal income tax share fell by the same amount.3 The corporate income tax intake compensated for the loss as revenue increased from 11 to 17 percent due to the elimination of many deductions, in spite of the decrease in the rate. In fact, income tax rates in Panama are now below average compared to the OECD, as well as Latin and Central America (Table 1).
6. The share of sales tax revenue also increased due to the scaling back of exemptions and the broadening of the tax base (Figure 1). It rose from 33 to 42 percent over the past ten years, however it is still slightly lower that the median for CAPDR of 55 percent (Annex II, Table 3). There was a noticeable decline in the share of domestic taxes on petroleum products, of 4 percentage points, which was most likely due to government subsidies introduced to alleviate the impact of high international oil prices.4 Finally, the share of trade taxes decreased slightly, although Panama remains more dependent on foreign trade taxes than its neighbors (with the exception of Nicaragua).
7. The increase in the share of sales tax revenue is encouraging, as broad-based sales taxes are seen as relatively easy to administer and as an efficient way to generate revenue. The VAT’s share in tax revenues doubled over the past decade (Figure 2 and Annex II, Table 3).5 Sales taxes are now higher than the income tax share and are becoming the main source of revenue, which is consistent with worldwide and regional trends, except for Costa Rica and Nicaragua (Figure 2). However, while the standard VAT rate varies across the Central American countries and the Western Hemisphere, ranging about 12-15 percent as of end 2010, Panama still has the lowest rate at 7 percent (Figure 2). VAT in Panama is also levied at two rates, with a higher rate (10 percent) applied to tobacco and alcoholic beverages. Although multiple rates are not uncommon, it is generally advisable to have just a single rate as administrative complexity tend to grow more than proportionately to the number of rates, and may impair collections as well as lead to excessive distortion in economic decisions (IMF, 2011).
Panama: Tax Revenue Buoyancy
Citation: IMF Staff Country Reports 2013, 089; 10.5089/9781484344477.002.A003
Sources: National Authorities, and staff calculations.
Panama: Tax Revenue Buoyancy
Citation: IMF Staff Country Reports 2013, 089; 10.5089/9781484344477.002.A003
Sources: National Authorities, and staff calculations.Panama: Tax Revenue Buoyancy
Citation: IMF Staff Country Reports 2013, 089; 10.5089/9781484344477.002.A003
Sources: National Authorities, and staff calculations.Tax Buoyancy
8. Tax buoyancy in Panama has improved substantially since the 1990s but has not fully reflected the high GDP growth pattern observed since the mid-2000s. Buoyancy, defined as the ratio of the annual growth of tax revenue to the annual growth rate of nominal GDP, which was below unity from mid-1990s till about 2005, stayed above unity thereafter (Figure 2).6 However, while buoyancy declined in line with economic activity in the beginning of 2000, it did not quite follow the very high growth pattern observed since 2004, even considering a lag, and stayed rather flat despite the tax reforms implemented over this period.7
VAT Productivity
9. Panama saw significant improvements in VAT productivity, following efforts to improve tax collections and broaden the tax base (Figure 3). A commonly used measure, a “c-efficiency” ratio, measures VAT revenue as a share of total domestic consumption divided by a standard VAT rate (Annex II, Tables 4 and 5). This ratio shows a standardized measure of revenue productivity across countries.8 A declining VAT productivity, if sustained, should be a source of concern. VAT productivity remained fairly stable in CAPDR over the past decade. While Panama’s VAT productivity compares relatively favorably with a group of upper middle income countries, its VAT revenue-to-GDP ratio is well below the median.
Panama and Cross-Country VAT Indicators
Citation: IMF Staff Country Reports 2013, 089; 10.5089/9781484344477.002.A003
Source: Fiscal Affairs Department staff calculations.
Panama and Cross-Country VAT Indicators
Citation: IMF Staff Country Reports 2013, 089; 10.5089/9781484344477.002.A003
Source: Fiscal Affairs Department staff calculations.Panama and Cross-Country VAT Indicators
Citation: IMF Staff Country Reports 2013, 089; 10.5089/9781484344477.002.A003
Source: Fiscal Affairs Department staff calculations.Estimating the Tax Effort1
An extensive empirical literature finds revenue performance to be correlated with a wide range of developmental, structural and institutional indicators. Many studies involve regressing various measures of revenue performance against country characteristics. Results vary quite markedly across data sets, with estimation methods and functional form, but some common findings are worth highlighting.
Figure 1 presents the results based on the application of the methodology measuring the tax effort developed by Greene (2008) and applied by Pessino and Fenochietto (2010). Revenue is a function R(x, p) of exogenous variables x and policy choices p. Assuming a multiplicative form r(x)I(p), and normalizing maxpI(p) = 1, maximum revenue is r(x) and I(p) ϵ [0,1] is an index of ‘effort.’ In an unbalanced panel over 1991–2006, excluding countries with receipts from hydrocarbons of more than 30 percent of total tax revenue, variables treated as entering r (revenue) are income per capita, the degree of openness of an economy, the value added of the agriculture sector as percent of GDP, public spending on education, and income inequality. Corruption and inflation are treated as entering I. While the technique clearly has limitations—in dealing with endogeneity issues, for instance, and resource wealth—the results are suggestive, and in most cases would conform to widely held presumptions.2 Based on this methodology, Panama ranks very low in its tax effort; and its tax-to GDP ratio is also much below the median for its peers.
Estimated Tax Effort in Selected Upper Middle-Income Countries
Citation: IMF Staff Country Reports 2013, 089; 10.5089/9781484344477.002.A003
1/ Includes Social Security taxes.Source: Fiscal Affairs Department staff calculations.
Estimated Tax Effort in Selected Upper Middle-Income Countries
Citation: IMF Staff Country Reports 2013, 089; 10.5089/9781484344477.002.A003
1/ Includes Social Security taxes.Source: Fiscal Affairs Department staff calculations.Estimated Tax Effort in Selected Upper Middle-Income Countries
Citation: IMF Staff Country Reports 2013, 089; 10.5089/9781484344477.002.A003
1/ Includes Social Security taxes.Source: Fiscal Affairs Department staff calculations.C. Challenges and a Way Forward
10. Notwithstanding recent advances, Panama appears to be a country with a low tax effort–at 48 percent versus the median of 77 percent (Box 1).9 Its actual tax to-GDP ratio of 14.3 percent is thus far from its tax collection capacity, making Panama stand out when comparing with the peer group’s median of 26.8 percent. For some countries with similar results, public choice is part of the explanation of a low tax effort–the legislation of these countries deliberately allows for a large level of exemptions (in some cases embedded in national constitutions) or very fairly low tax rates, such as in Panama (the very high per capita income countries or regions like Singapore and Hong Kong show similar results as their tax rates are very low). In addition to low tax rates, reforms came short of their objective to yield substantial permanent additional revenue due to widespread tax exemptions and persistent weaknesses in tax administration.10
Tax Expenditure
11. Widespread tax exemptions introduced for selected industries during the 1990s and early 2000s led to high tax expenditures (Box 2). Exemptions, in particular from custom duties, corporate income tax, real estate tax, and VAT, have been granted under a variety of schemes and modalities. International experience widely regards tax exemptions, particularly on investment, as an ill-designed form of incentive, and one that poses considerable dangers to the wider tax system as it creates loopholes which could be attempted or pushed for to be recreated in other areas (IMF, 2011).
12. The cost of exemptions, however, has been declining since 2001 (Annex II, Table 6). As a percent of tax revenues, especially, the cost has been reduced dramatically, from almost 15 percent to 4 percent over the past decade. Recent reforms of tax incentives made taxation somewhat more progressive. While further reducing or eliminating tax exemptions is no panacea, it would nonetheless help improve the equity of the system.
Tax Administration
13. There are still serious weaknesses in tax administration and management of tax compliance.11,12 These weaknesses were detected at the Tax Directorate (Direction General de Impuestos (DGI)) in strategic management and planning, human resources, auditing capacity, lack of a taxpayer compliance program, and weak controls.
14. Panama remains the only country in Latin America that does not have an approved strategic plan or an annual operational plan for the DGI. The current administration has recently asked the multilateral institutions to help design a strategic plan for the DGI and it is strengthening efforts to improve controls and address evasion. Recent plans to establish an independent tax agency replacing the Directorate should help strengthen its capacity to implement the necessary reforms and fulfill its mandate.
15. In the customs area, efforts at the National Customs Agency’s (Administration National de Aduanas or ANA) in improving customs control and procedures reveal little progress to date. And, while there is a strategic plan for the agency, there are no monitoring indicators to assess progress of major projects or to track their results. Despite the large amount of resources invested, the operating units of the ANA still do not have structures and basic elements to conduct inspections in the primary customs zone; and there is little oversight of special regimes.
16. The recent creation of the LTU is an important progress, as Panama was the only country in Latin America without such a structure. The international experience demonsrates that an LTU could greatly help to increase control over the largest taxpayers. While these could only be a handful–comprising 75 large taxpayers in Panama–these could be responsible for more than half of the revenue intake.13
17. A set of main recommendations for strengthening tax and customs collections is presented in Box 3. The main areas for improvement, which could yield a substantial increase in tax revenue, are the following:
Improving tax education, an area where Panama ranks last in the Latin America region. This will also help improve the fiscal responsibility of the citizens and add to the success of the DGI’s mission in general.
Tackling more decisively tax evasion and corruption.14 In particular, enhancing cooperation and exchange of information between the DGI and Customs Agency is necessary for the purpose of cross-checking information on taxpayers and fighting tax evasion.
If the DGI structure is preserved, ensure that it has adequate resources to improve human resource management.15
Strengthening controls and targeted audits at the Customs Agency.
18. Future efforts should be mostly directed at addressing the aforementioned priorities and flaws in tax administration rather than introducing new legislative changes. Although there would be room to increase the VAT rates to levels comparable to other upper-middle-income countries, international experience suggests that frequent changes in tax legislation upset the expectations of investors and make it difficult for taxpayers to understand and comply with the laws (Gordon and Thuronyi, 1996).16
Examples of Tax Incentives In Panama
Law 8 of June 1994(subsequently modified in 1998) entitled Panamanian and foreign individuals and companies investing in tourism at least US$50,000 in rural areas or at least US$300,000 in urban areas to the exemption from import duties, property tax and corporate tax for a period of up to twenty years. The incentive package in construction comprises a number of provisions, including subsidized loans for acquiring inexpensive housing and exemption from the duty levied on the first property sale. But by far the most generous provision grants a twenty-year property tax exemption to newly built properties. Port companies benefited from government concessions at favorable terms.
According to Law 34 of November 2005, tax incentives in construction were to be partially withdrawn after September 1, 2006. The period of future tax exemptions diminishes with the market value of the property: more expensive properties (valued above US$250,000) will enjoy tax exemption during the first 5 years (previously 20 years), medium-value properties (ranging between US$100,000 and US$250,000) – during the first 10 years, and cheaper houses (not be partially withdrawn after September 1, 2006. The period of future tax exceeding US$100,000 in value) – during the first 15 years.
Other exemptions include incentives to nontraditional exports, small businesses, residential construction, tourism, petroleum products trade, agroindustry, reforestation, foreign direct investment, exports, leasing, Panama’s historic district rehabilitation, public transportation, and several other sectors. Some exemptions were granted in the form of tax certificates, in particular industrial export incentives (Certificados de Abono Tributario, or CATs (was due to expire in end-2005 but did not.)
Tax Administration Reform Priorities
Tax Directorate
Strengthening structural weaknesses
Develop a plan for all business areas to simplify structure, redefine hierarch lines, and separate the tactical area (planning, coordination and evaluation) from the operational.
Establish a permanent team in charge of internal control, which is responsible for combating and prevention of corruption, and define the security policy information.
Promote the stability of human resources through generating a career plan, admission through public tenders, avoiding political interference, and competitive compensation.
Facilitation of taxpayer compliance
Promote and coordinate direct and remote channels for the relationship with its taxpayers; appoint an individual in charge of harmonizing and coordinating development, content and feedback from all channels of interaction with the taxpayer.
Generate a comprehensive plan involving corporate image channels, attention in person, online, and the development of a future virtual office-making.
Improve information for the analysis by enhancing the Register of taxpayers.
Improve coordination and information exchange with the control areas and external agents.
Generate contingency plans in case of a failure of the primary databases.
Addressing tax evasion
Define a comprehensive strategy to address weakness in this area.
Improve management and evaluation of the overall performance of the tax audit, and introduce enhancement to the processes of control.
The National Customs Agency
Strengthening Office of Risk Analysis
Improve the quality and timeliness of information received, the methodology for the generation of profiles depending on the type of risk inputs or outputs that could be generated for the control post, and systems or modules to support risk management.
Establish a clear strategy for the prevention and management of fiscal risks.
Revise the organizational structures responsible for implementing control measures, and clarify responsibilities of each division.
Overhauling the organization and technological structure
Align the currently horizontal structure with international best practice, with a separate internal audit department. In addition, tax auditors need to communicate more effectively with the departments in charge of research, monitoring and risk management.
In order to create greater synergy between various areas, create a Risk Committee to help define and monitor strategies and control policies to be implemented before, during and after the release of the goods.
Analyze the feasibility of grouping in a single area control functions subsequently aligned within a control cycle with the purpose of checking the due performance of taxes and regulations, and restrictions.
Assess and evaluate and where necessary create or adapt the manuals of operational procedures, in line with the functionality of the new computer system EMIS.
Annex I. Main Features of the 2002–10 Tax Reforms
Corporate Income
The corporate income tax (CIT) rate was scheduled to be lowered from 30 to 29 percent in 2005, and 28 percent starting in 2007 (2002).
Banks’ income, previously largely exempt, was subjected to a minimum tax (2002).
Some fiscal incentives, authorizing deductions to corporate income tax, were to be phased out over five years (2002).
CIT was maintained at 30 percent against a scheduled lowering to 29 percent under the 2002 tax law (2005).
Effective 2006, limits on deductions for businesses resulted in a minimum income tax of 1.4 percent of sales. Loss-making businesses could appeal to the Tax Directorate for exemption from these limits on deductions (2005).
CIT was lowered from 30 percent to 25 percent over two years, and over 4 years for telecommunications, banking, electricity, insurance and casinos (2009).
The corporate expenditure calculation method was modified, notably for the financial sector (2009).
The Colón Free Zone, casinos, maritime transportation, and oil trade were subjected to a more comprehensive corporate and dividend taxation treatment; and profits from some foreign operations were to be taxed (2009).
Personal Income
The annual exemption under the personal income tax (PIT) was raised from US$3,900 to US$10,400 (2002).
The maximum PIT was reduced from 30 percent to 27 percent (2005).
Effective 2006, a minimum tax on income, amounting to 6 percent of gross income for individuals earning at least $60,000 annually, was introduced. Individuals earning solely wages were exempt from this tax (2005).
PIT rates were lowered from 20-27 percent to 15-25 percent and the exempted income threshold level was raised from 1.1 to 1.4 times income per capita (2009).
Most personal expenditure deductions were eliminated (2009).
Business Costs
The annual business registration fee (Tasa Unica) was raised from $150 to $250 (2002).
The business license fee was raised from 1 percent to 2 percent of capital (2002).
Sales of services to businesses in the Colón Free Zone were made liable to income tax (2005).
Representation expenses became part of taxable income (2005).
Increase in fees paid by businesses in the Colón Free Zone, by an additional US$30 million, was introduced (2005).
Tax on real estate transactions, including capital gains on the sale of property, was introduced (2009).
Value Added Tax
The VAT’s (ITBM was renamed ITBMS) base was widened to include services, albeit with many exceptions (health, education, transportation, electric power, fixed telephone, press, mail, insurance, and various other services). Small businesses with annual sales less than $36,000 were exempt (2002).
The 5 percent consumption tax levied on a selective basis was extended to include luxury goods (2002).
Amounts in excess of $300 won in casinos were subjected to a Selective Consumption Tax of 5 percent (2005).
An exemption of ITBMS for fast-food businesses was introduced and ITBMS rate on tobacco was raised to 15 percent (2005).
Bank commissions was brought under the VAT coverage (2009).
The minimum alternative tax rate was lowered while the standard rate of the VAT was increased from 5 percent to 7 percent (2009).
Tax Incentives
Tax exemptions for the housing sector were modified to better target low-income housing (2002).
The Industrial Incentive Act (Law 11/2004) adopted in February 2004 granted new tax incentives to industry while temporary incentives to construction were introduced in 2003, and extended through 2005 (2004).
The definition of tax exempt income of foreign origin was narrowed (2005).
The 2004 Industrial Development and Incentive Act (Ley 11 de 2004) was cancelled (2005).
Reforestation tax incentives were eliminated (2005).
Tax incentives to nontraditional exports (CATs) were set to be eliminated by end-2005 (2005).
Tax incentives for home improvement were continued (2005).
Other Measures
Property transfer tax schedule combined with an incentive to update assessed values was reduced (2005).
Heavier sanctions were introduced for noncompliance with tax laws (2005).
Businesses had to adopt international accounting and auditing standards (2005).
Tax Administration
A law to reform the revenue directorate to give it more operational autonomy was approved, supported by regional technical assistance to improve tax administration (2002).
Operational and financial autonomy was granted to the tax administration unit, and a specialized tax court was created (2009).
Annex II. Tables
CAPDR: Recent Tax Reforms, 2009-12
(estimated gains, in percent of GDP)
National Authorities’ and staff estimations.
CAPDR: Recent Tax Reforms, 2009-12
(estimated gains, in percent of GDP)
| Honduras | Panama | El Salvador | Guatemala | Nicaragua | Dom Republic | |
|---|---|---|---|---|---|---|
| Tax on income | ||||||
| Taxation of dividends | x | x | x | x | ||
| Elimination of deductions/exemptions | x | x | x | x | x | |
| Minimum tax | x | x | x | |||
| Additional rate for large enterprises | x | |||||
| Tax on casinos and gambling | x | |||||
| Increase in deductions | x | x | ||||
| Increase in rates | x | x | ||||
| Increase in minimum exempt income | x | x | x | x | ||
| Norms on transfer pricing | x | x | ||||
| VAT | ||||||
| Elimination of exemptions | x | x | ||||
| Increase in rate | x | |||||
| Selective tax on consumption | ||||||
| Elimination of exemptions and expansion of base | x | x | x | |||
| Elimination of fiscal credit | x | |||||
| Increase in rates | x | x | x | |||
| Other | ||||||
| Tax on legal entities | ||||||
| Increase on tax rates on vehicles | x | |||||
| Tax on bank assets | x | |||||
| Tax on financial transactions | x | |||||
| Total gain/1 | 1.9 | 1.8 | 1.7 | 1.2 | 0.9 | 0.5 |
National Authorities’ and staff estimations.
CAPDR: Recent Tax Reforms, 2009-12
(estimated gains, in percent of GDP)
| Honduras | Panama | El Salvador | Guatemala | Nicaragua | Dom Republic | |
|---|---|---|---|---|---|---|
| Tax on income | ||||||
| Taxation of dividends | x | x | x | x | ||
| Elimination of deductions/exemptions | x | x | x | x | x | |
| Minimum tax | x | x | x | |||
| Additional rate for large enterprises | x | |||||
| Tax on casinos and gambling | x | |||||
| Increase in deductions | x | x | ||||
| Increase in rates | x | x | ||||
| Increase in minimum exempt income | x | x | x | x | ||
| Norms on transfer pricing | x | x | ||||
| VAT | ||||||
| Elimination of exemptions | x | x | ||||
| Increase in rate | x | |||||
| Selective tax on consumption | ||||||
| Elimination of exemptions and expansion of base | x | x | x | |||
| Elimination of fiscal credit | x | |||||
| Increase in rates | x | x | x | |||
| Other | ||||||
| Tax on legal entities | ||||||
| Increase on tax rates on vehicles | x | |||||
| Tax on bank assets | x | |||||
| Tax on financial transactions | x | |||||
| Total gain/1 | 1.9 | 1.8 | 1.7 | 1.2 | 0.9 | 0.5 |
National Authorities’ and staff estimations.
Panama: Revenue
(in percent of GDP)
Panama: Revenue
(in percent of GDP)
| 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total revenue (incl. grants) | 16.5 | 16.2 | 15.6 | 14.5 | 15.2 | 18.6 | 19.3 | 19.8 | 18.6 | 19.0 | 18.3 | |||||
| Current revenue | 16.3 | 16.2 | 15.3 | 14.4 | 15.2 | 18.5 | 19.0 | 18.4 | 18.2 | 18.5 | 18.2 | |||||
| Tax revenue | 8.8 | 8.6 | 8.7 | 8.6 | 8.7 | 10.3 | 10.6 | 10.6 | 11.0 | 11.7 | 11.6 | |||||
| Income tax, o/w | 3.8 | 3.7 | 3.4 | 3.5 | 3.8 | 5.1 | 5.0 | 4.9 | 5.2 | 5.0 | 4.8 | |||||
| Personal | 2.0 | 2.1 | 1.6 | 1.5 | 1.6 | 1.7 | 1.7 | 1.7 | 1.8 | 1.5 | 1.7 | |||||
| Business, o/w | 1.8 | 1.6 | 1.8 | 2.0 | 2.2 | 3.5 | 3.3 | 3.2 | 3.4 | 3.6 | 3.1 | |||||
| Panama Canal | 0.5 | 0.4 | 0.4 | 0.4 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.2 | 0.2 | |||||
| Other Business | 1.4 | 1.2 | 1.3 | 1.6 | 1.8 | 2.5 | 2.6 | 2.6 | 3.0 | 3.0 | 2.5 | |||||
| Wealth tax | 0.5 | 0.5 | 0.7 | 0.5 | 0.6 | 0.5 | 0.6 | 0.5 | 0.6 | 0.7 | 0.6 | |||||
| Taxes on foreign trade, o/w | 1.5 | 1.5 | 1.6 | 1.5 | 1.6 | 1.6 | 1.4 | 1.8 | 1.6 | 1.5 | 1.3 | |||||
| Imports | 1.5 | 1.5 | 1.6 | 1.5 | 1.6 | 1.6 | 1.4 | 1.8 | 1.6 | 1.5 | 1.3 | |||||
| Taxes on domestic transactions, o/w | 3.0 | 2.9 | 3.2 | 3.0 | 2.8 | 3.1 | 3.7 | 3.3 | 3.5 | 4.5 | 4.9 | |||||
| Value added ITBM | 1.3 | 1.3 | 1.5 | 1.6 | 1.7 | 1.9 | 2.6 | 2.3 | 2.3 | 3.1 | 3.4 | |||||
| Petroleum products | 0.9 | 0.9 | 0.9 | 0.7 | 0.5 | 0.5 | 0.5 | 0.4 | 0.5 | 0.4 | 0.3 | |||||
| Tabacco and Beverages | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.4 | 0.4 | 0.6 | 0.8 | |||||
| Other | 0.5 | 0.5 | 0.5 | 0.4 | 0.4 | 0.3 | 0.4 | 0.3 | 0.3 | 0.4 | 0.4 | |||||
| Extraordinary revenue | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.7 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||
| Nontax revenue | 7.5 | 7.6 | 6.6 | 5.8 | 6.5 | 8.2 | 8.4 | 7.8 | 7.2 | 6.9 | 6.5 | |||||
| Panama Canal (fees from tolls) | 1.2 | 1.2 | 1.1 | 1.3 | 1.3 | 1.6 | 1.8 | 1.5 | 1.4 | 1.3 | 1.2 | |||||
| Other | 1.4 | 1.6 | 1.3 | 0.8 | 1.0 | 1.5 | 1.2 | 1.2 | 0.9 | 1.1 | 0.9 | |||||
| Transfers from public agencies | 2.1 | 1.7 | 1.6 | 1.4 | 1.3 | 1.3 | 1.2 | 1.8 | 1.6 | 1.6 | 1.0 | |||||
| Consolidated public sector | 0.7 | 0.6 | 0.5 | 0.4 | 0.5 | 0.5 | 0.5 | 1.1 | 0.8 | 0.8 | 0.5 | |||||
| Non-consolidated public sector | 1.4 | 1.1 | 1.1 | 1.0 | 0.8 | 0.8 | 0.7 | 0.7 | 0.8 | 0.8 | 0.5 | |||||
| Interest from Fiduciary Fund and others | 0.9 | 1.0 | 0.7 | 0.5 | 0.5 | 0.4 | 0.5 | 0.4 | 0.5 | 0.2 | 0.3 | |||||
| Dividends from public enterprises, o/w | 1.8 | 2.0 | 2.0 | 1.6 | 2.1 | 3.4 | 3.7 | 2.9 | 2.7 | 2.7 | 3.1 | |||||
| Panama Canal Authority | 0.3 | 0.7 | 0.8 | 1.3 | 1.3 | 2.0 | 2.5 | 1.5 | 1.8 | 1.8 | 2.2 | |||||
| Capital revenues | 0.3 | 0.0 | 0.3 | 0.1 | 0.0 | 0.1 | 0.1 | 1.1 | 0.3 | 0.5 | 0.0 | |||||
| Grants | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.2 | 0.4 | 0.1 | 0.1 | 0.1 | |||||
| Memo item: | ||||||||||||||||
| GDP (US dollar billion) | 11.8 | 12.2 | 12.9 | 14.1 | 15.4 | 17.1 | 19.7 | 23.0 | 24.1 | 26.5 | 30.5 | |||||
Panama: Revenue
(in percent of GDP)
| 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total revenue (incl. grants) | 16.5 | 16.2 | 15.6 | 14.5 | 15.2 | 18.6 | 19.3 | 19.8 | 18.6 | 19.0 | 18.3 | |||||
| Current revenue | 16.3 | 16.2 | 15.3 | 14.4 | 15.2 | 18.5 | 19.0 | 18.4 | 18.2 | 18.5 | 18.2 | |||||
| Tax revenue | 8.8 | 8.6 | 8.7 | 8.6 | 8.7 | 10.3 | 10.6 | 10.6 | 11.0 | 11.7 | 11.6 | |||||
| Income tax, o/w | 3.8 | 3.7 | 3.4 | 3.5 | 3.8 | 5.1 | 5.0 | 4.9 | 5.2 | 5.0 | 4.8 | |||||
| Personal | 2.0 | 2.1 | 1.6 | 1.5 | 1.6 | 1.7 | 1.7 | 1.7 | 1.8 | 1.5 | 1.7 | |||||
| Business, o/w | 1.8 | 1.6 | 1.8 | 2.0 | 2.2 | 3.5 | 3.3 | 3.2 | 3.4 | 3.6 | 3.1 | |||||
| Panama Canal | 0.5 | 0.4 | 0.4 | 0.4 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.2 | 0.2 | |||||
| Other Business | 1.4 | 1.2 | 1.3 | 1.6 | 1.8 | 2.5 | 2.6 | 2.6 | 3.0 | 3.0 | 2.5 | |||||
| Wealth tax | 0.5 | 0.5 | 0.7 | 0.5 | 0.6 | 0.5 | 0.6 | 0.5 | 0.6 | 0.7 | 0.6 | |||||
| Taxes on foreign trade, o/w | 1.5 | 1.5 | 1.6 | 1.5 | 1.6 | 1.6 | 1.4 | 1.8 | 1.6 | 1.5 | 1.3 | |||||
| Imports | 1.5 | 1.5 | 1.6 | 1.5 | 1.6 | 1.6 | 1.4 | 1.8 | 1.6 | 1.5 | 1.3 | |||||
| Taxes on domestic transactions, o/w | 3.0 | 2.9 | 3.2 | 3.0 | 2.8 | 3.1 | 3.7 | 3.3 | 3.5 | 4.5 | 4.9 | |||||
| Value added ITBM | 1.3 | 1.3 | 1.5 | 1.6 | 1.7 | 1.9 | 2.6 | 2.3 | 2.3 | 3.1 | 3.4 | |||||
| Petroleum products | 0.9 | 0.9 | 0.9 | 0.7 | 0.5 | 0.5 | 0.5 | 0.4 | 0.5 | 0.4 | 0.3 | |||||
| Tabacco and Beverages | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 | 0.4 | 0.4 | 0.6 | 0.8 | |||||
| Other | 0.5 | 0.5 | 0.5 | 0.4 | 0.4 | 0.3 | 0.4 | 0.3 | 0.3 | 0.4 | 0.4 | |||||
| Extraordinary revenue | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.7 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||
| Nontax revenue | 7.5 | 7.6 | 6.6 | 5.8 | 6.5 | 8.2 | 8.4 | 7.8 | 7.2 | 6.9 | 6.5 | |||||
| Panama Canal (fees from tolls) | 1.2 | 1.2 | 1.1 | 1.3 | 1.3 | 1.6 | 1.8 | 1.5 | 1.4 | 1.3 | 1.2 | |||||
| Other | 1.4 | 1.6 | 1.3 | 0.8 | 1.0 | 1.5 | 1.2 | 1.2 | 0.9 | 1.1 | 0.9 | |||||
| Transfers from public agencies | 2.1 | 1.7 | 1.6 | 1.4 | 1.3 | 1.3 | 1.2 | 1.8 | 1.6 | 1.6 | 1.0 | |||||
| Consolidated public sector | 0.7 | 0.6 | 0.5 | 0.4 | 0.5 | 0.5 | 0.5 | 1.1 | 0.8 | 0.8 | 0.5 | |||||
| Non-consolidated public sector | 1.4 | 1.1 | 1.1 | 1.0 | 0.8 | 0.8 | 0.7 | 0.7 | 0.8 | 0.8 | 0.5 | |||||
| Interest from Fiduciary Fund and others | 0.9 | 1.0 | 0.7 | 0.5 | 0.5 | 0.4 | 0.5 | 0.4 | 0.5 | 0.2 | 0.3 | |||||
| Dividends from public enterprises, o/w | 1.8 | 2.0 | 2.0 | 1.6 | 2.1 | 3.4 | 3.7 | 2.9 | 2.7 | 2.7 | 3.1 | |||||
| Panama Canal Authority | 0.3 | 0.7 | 0.8 | 1.3 | 1.3 | 2.0 | 2.5 | 1.5 | 1.8 | 1.8 | 2.2 | |||||
| Capital revenues | 0.3 | 0.0 | 0.3 | 0.1 | 0.0 | 0.1 | 0.1 | 1.1 | 0.3 | 0.5 | 0.0 | |||||
| Grants | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.2 | 0.4 | 0.1 | 0.1 | 0.1 | |||||
| Memo item: | ||||||||||||||||
| GDP (US dollar billion) | 11.8 | 12.2 | 12.9 | 14.1 | 15.4 | 17.1 | 19.7 | 23.0 | 24.1 | 26.5 | 30.5 | |||||
Panama: Revenue
(in percent, a share of total revenue)
Panama: Revenue
(in percent, a share of total revenue)
| 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total revenue (incl. grants) | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | |||||
| Current revenue | 98.3 | 99.9 | 98.2 | 99.1 | 99.7 | 99.3 | 98.6 | 92.8 | 97.9 | 97.3 | 99.4 | |||||
| Tax revenue | 53.2 | 53.1 | 56.0 | 59.2 | 57.2 | 55.3 | 55.0 | 53.5 | 59.0 | 61.3 | 63.6 | |||||
| Income tax, o/w | 23.3 | 22.8 | 21.6 | 23.9 | 24.9 | 27.6 | 25.9 | 25.0 | 28.2 | 26.5 | 26.1 | |||||
| Personal | 12.2 | 12.9 | 10.4 | 10.2 | 10.7 | 9.0 | 8.7 | 8.8 | 9.7 | 7.7 | 9.2 | |||||
| Business, o/w | 11.1 | 10.0 | 11.2 | 13.7 | 14.2 | 18.6 | 17.2 | 16.2 | 18.5 | 18.8 | 16.8 | |||||
| Panama Canal | 2.8 | 2.5 | 2.6 | 2.7 | 2.2 | 1.8 | 1.6 | 1.4 | 1.4 | 1.0 | 1.2 | |||||
| Other Business | 8.3 | 7.5 | 8.6 | 11.0 | 12.0 | 13.5 | 13.6 | 13.3 | 16.2 | 15.8 | 13.7 | |||||
| Wealth tax | 3.1 | 2.8 | 4.2 | 3.8 | 3.8 | 2.9 | 2.9 | 2.6 | 3.4 | 3.6 | 3.5 | |||||
| Taxes on foreign trade, o/w | 8.8 | 9.3 | 9.9 | 10.6 | 10.3 | 8.5 | 7.1 | 9.0 | 8.7 | 7.7 | 7.2 | |||||
| Imports | 8.8 | 9.3 | 9.9 | 10.6 | 10.3 | 8.5 | 7.1 | 9.0 | 8.7 | 7.7 | 7.2 | |||||
| Taxes on domestic transactions, o/w | 18.0 | 18.1 | 20.3 | 20.9 | 18.3 | 16.4 | 19.2 | 16.9 | 18.7 | 23.5 | 26.9 | |||||
| Value added ITBM | 7.9 | 7.8 | 9.6 | 11.2 | 11.1 | 10.3 | 13.4 | 11.6 | 12.5 | 16.4 | 18.6 | |||||
| Petroleum products | 5.5 | 5.8 | 5.8 | 4.9 | 3.0 | 2.7 | 2.4 | 1.9 | 2.5 | 1.9 | 1.6 | |||||
| Tabacco and Beverages | 1.7 | 1.6 | 1.8 | 1.7 | 1.9 | 1.5 | 1.6 | 1.8 | 2.0 | 3.2 | 4.5 | |||||
| Other | 2.9 | 2.9 | 3.0 | 3.0 | 2.4 | 1.9 | 1.8 | 1.6 | 1.8 | 2.0 | 2.1 | |||||
| Extraordinary revenue | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 3.8 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||
| Nontax revenue | 45.1 | 46.8 | 42.2 | 39.9 | 42.5 | 43.9 | 43.6 | 39.3 | 38.8 | 36.0 | 35.8 | |||||
| Panama Canal (fees from tolls) | 7.2 | 7.7 | 7.2 | 9.0 | 8.7 | 8.5 | 9.4 | 7.8 | 7.8 | 6.9 | 6.5 | |||||
| Other | 8.3 | 9.7 | 8.1 | 5.8 | 6.6 | 8.2 | 6.3 | 5.9 | 5.1 | 5.5 | 5.1 | |||||
| Transfers from public agencies | 12.9 | 10.7 | 10.3 | 9.7 | 8.6 | 7.2 | 6.4 | 9.0 | 8.7 | 8.4 | 5.4 | |||||
| Consolidated public sector | 4.2 | 3.8 | 3.0 | 2.9 | 3.1 | 2.7 | 2.6 | 5.4 | 4.3 | 4.1 | 2.6 | |||||
| Non-consolidated public sector | 8.7 | 6.9 | 7.2 | 6.7 | 5.4 | 4.4 | 3.8 | 3.6 | 4.4 | 4.3 | 2.8 | |||||
| Interest from Fiduciary Fund and others | 5.7 | 6.2 | 4.2 | 3.8 | 3.5 | 2.0 | 2.3 | 1.9 | 2.6 | 0.9 | 1.8 | |||||
| Dividends from public enterprises, o/w | 11.0 | 12.5 | 12.5 | 11.2 | 13.5 | 18.2 | 19.0 | 14.7 | 14.7 | 14.3 | 16.9 | |||||
| Panama Canal Authority | 1.8 | 4.5 | 5.2 | 9.0 | 8.5 | 10.5 | 12.8 | 7.5 | 9.7 | 9.3 | 12.1 | |||||
| Capital revenues | 1.6 | 0.1 | 1.8 | 0.9 | 0.3 | 0.7 | 0.6 | 5.3 | 1.5 | 2.4 | 0.3 | |||||
| Grants | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.8 | 1.8 | 0.7 | 0.3 | 0.3 | |||||
| share of tax revenue | ||||||||||||||||
| Income tax, o/w | 43.7 | 43.0 | 38.6 | 40.4 | 43.5 | 49.8 | 47.1 | 46.6 | 47.8 | 43.2 | 41.0 | |||||
| Personal | 22.9 | 24.2 | 18.5 | 17.3 | 18.7 | 16.3 | 15.8 | 16.4 | 16.4 | 12.6 | 14.5 | |||||
| Business, o/w | 20.8 | 18.7 | 20.1 | 23.1 | 24.8 | 33.6 | 31.2 | 30.2 | 31.4 | 30.6 | 26.5 | |||||
| Panama Canal | 5.2 | 4.6 | 4.7 | 4.5 | 3.9 | 3.3 | 3.0 | 2.6 | 2.4 | 1.7 | 1.8 | |||||
| Other Business | 15.6 | 14.1 | 15.3 | 18.6 | 20.9 | 24.4 | 24.7 | 24.9 | 27.5 | 25.7 | 21.5 | |||||
| Wealth tax | 5.9 | 5.3 | 7.5 | 6.4 | 6.6 | 5.2 | 5.2 | 4.9 | 5.7 | 5.9 | 5.5 | |||||
| Taxes on foreign trade, o/w | 16.6 | 17.5 | 17.8 | 17.9 | 18.0 | 15.4 | 12.8 | 16.9 | 14.8 | 12.6 | 11.3 | |||||
| Imports | 16.6 | 17.5 | 17.8 | 17.9 | 18.0 | 15.4 | 12.8 | 16.9 | 14.8 | 12.6 | 11.3 | |||||
| Taxes on domestic transactions, o/w | 33.8 | 34.1 | 36.2 | 35.2 | 32.0 | 29.6 | 34.9 | 31.6 | 31.7 | 38.3 | 42.2 | |||||
| Value added ITBM | 14.8 | 14.8 | 17.1 | 18.8 | 19.4 | 18.6 | 24.4 | 21.6 | 21.1 | 26.7 | 29.3 | |||||
| Petroleum products | 10.3 | 11.0 | 10.4 | 8.3 | 5.2 | 4.9 | 4.3 | 3.5 | 4.2 | 3.1 | 2.6 | |||||
| Tabacco and Beverages | 3.2 | 3.0 | 3.3 | 2.9 | 3.3 | 2.7 | 2.9 | 3.4 | 3.3 | 5.2 | 7.0 | |||||
| Other | 5.5 | 5.4 | 5.4 | 5.1 | 4.1 | 3.4 | 3.4 | 3.0 | 3.1 | 3.2 | 3.3 | |||||
Panama: Revenue
(in percent, a share of total revenue)
| 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total revenue (incl. grants) | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | 100 | |||||
| Current revenue | 98.3 | 99.9 | 98.2 | 99.1 | 99.7 | 99.3 | 98.6 | 92.8 | 97.9 | 97.3 | 99.4 | |||||
| Tax revenue | 53.2 | 53.1 | 56.0 | 59.2 | 57.2 | 55.3 | 55.0 | 53.5 | 59.0 | 61.3 | 63.6 | |||||
| Income tax, o/w | 23.3 | 22.8 | 21.6 | 23.9 | 24.9 | 27.6 | 25.9 | 25.0 | 28.2 | 26.5 | 26.1 | |||||
| Personal | 12.2 | 12.9 | 10.4 | 10.2 | 10.7 | 9.0 | 8.7 | 8.8 | 9.7 | 7.7 | 9.2 | |||||
| Business, o/w | 11.1 | 10.0 | 11.2 | 13.7 | 14.2 | 18.6 | 17.2 | 16.2 | 18.5 | 18.8 | 16.8 | |||||
| Panama Canal | 2.8 | 2.5 | 2.6 | 2.7 | 2.2 | 1.8 | 1.6 | 1.4 | 1.4 | 1.0 | 1.2 | |||||
| Other Business | 8.3 | 7.5 | 8.6 | 11.0 | 12.0 | 13.5 | 13.6 | 13.3 | 16.2 | 15.8 | 13.7 | |||||
| Wealth tax | 3.1 | 2.8 | 4.2 | 3.8 | 3.8 | 2.9 | 2.9 | 2.6 | 3.4 | 3.6 | 3.5 | |||||
| Taxes on foreign trade, o/w | 8.8 | 9.3 | 9.9 | 10.6 | 10.3 | 8.5 | 7.1 | 9.0 | 8.7 | 7.7 | 7.2 | |||||
| Imports | 8.8 | 9.3 | 9.9 | 10.6 | 10.3 | 8.5 | 7.1 | 9.0 | 8.7 | 7.7 | 7.2 | |||||
| Taxes on domestic transactions, o/w | 18.0 | 18.1 | 20.3 | 20.9 | 18.3 | 16.4 | 19.2 | 16.9 | 18.7 | 23.5 | 26.9 | |||||
| Value added ITBM | 7.9 | 7.8 | 9.6 | 11.2 | 11.1 | 10.3 | 13.4 | 11.6 | 12.5 | 16.4 | 18.6 | |||||
| Petroleum products | 5.5 | 5.8 | 5.8 | 4.9 | 3.0 | 2.7 | 2.4 | 1.9 | 2.5 | 1.9 | 1.6 | |||||
| Tabacco and Beverages | 1.7 | 1.6 | 1.8 | 1.7 | 1.9 | 1.5 | 1.6 | 1.8 | 2.0 | 3.2 | 4.5 | |||||
| Other | 2.9 | 2.9 | 3.0 | 3.0 | 2.4 | 1.9 | 1.8 | 1.6 | 1.8 | 2.0 | 2.1 | |||||
| Extraordinary revenue | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 3.8 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||
| Nontax revenue | 45.1 | 46.8 | 42.2 | 39.9 | 42.5 | 43.9 | 43.6 | 39.3 | 38.8 | 36.0 | 35.8 | |||||
| Panama Canal (fees from tolls) | 7.2 | 7.7 | 7.2 | 9.0 | 8.7 | 8.5 | 9.4 | 7.8 | 7.8 | 6.9 | 6.5 | |||||
| Other | 8.3 | 9.7 | 8.1 | 5.8 | 6.6 | 8.2 | 6.3 | 5.9 | 5.1 | 5.5 | 5.1 | |||||
| Transfers from public agencies | 12.9 | 10.7 | 10.3 | 9.7 | 8.6 | 7.2 | 6.4 | 9.0 | 8.7 | 8.4 | 5.4 | |||||
| Consolidated public sector | 4.2 | 3.8 | 3.0 | 2.9 | 3.1 | 2.7 | 2.6 | 5.4 | 4.3 | 4.1 | 2.6 | |||||
| Non-consolidated public sector | 8.7 | 6.9 | 7.2 | 6.7 | 5.4 | 4.4 | 3.8 | 3.6 | 4.4 | 4.3 | 2.8 | |||||
| Interest from Fiduciary Fund and others | 5.7 | 6.2 | 4.2 | 3.8 | 3.5 | 2.0 | 2.3 | 1.9 | 2.6 | 0.9 | 1.8 | |||||
| Dividends from public enterprises, o/w | 11.0 | 12.5 | 12.5 | 11.2 | 13.5 | 18.2 | 19.0 | 14.7 | 14.7 | 14.3 | 16.9 | |||||
| Panama Canal Authority | 1.8 | 4.5 | 5.2 | 9.0 | 8.5 | 10.5 | 12.8 | 7.5 | 9.7 | 9.3 | 12.1 | |||||
| Capital revenues | 1.6 | 0.1 | 1.8 | 0.9 | 0.3 | 0.7 | 0.6 | 5.3 | 1.5 | 2.4 | 0.3 | |||||
| Grants | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.8 | 1.8 | 0.7 | 0.3 | 0.3 | |||||
| share of tax revenue | ||||||||||||||||
| Income tax, o/w | 43.7 | 43.0 | 38.6 | 40.4 | 43.5 | 49.8 | 47.1 | 46.6 | 47.8 | 43.2 | 41.0 | |||||
| Personal | 22.9 | 24.2 | 18.5 | 17.3 | 18.7 | 16.3 | 15.8 | 16.4 | 16.4 | 12.6 | 14.5 | |||||
| Business, o/w | 20.8 | 18.7 | 20.1 | 23.1 | 24.8 | 33.6 | 31.2 | 30.2 | 31.4 | 30.6 | 26.5 | |||||
| Panama Canal | 5.2 | 4.6 | 4.7 | 4.5 | 3.9 | 3.3 | 3.0 | 2.6 | 2.4 | 1.7 | 1.8 | |||||
| Other Business | 15.6 | 14.1 | 15.3 | 18.6 | 20.9 | 24.4 | 24.7 | 24.9 | 27.5 | 25.7 | 21.5 | |||||
| Wealth tax | 5.9 | 5.3 | 7.5 | 6.4 | 6.6 | 5.2 | 5.2 | 4.9 | 5.7 | 5.9 | 5.5 | |||||
| Taxes on foreign trade, o/w | 16.6 | 17.5 | 17.8 | 17.9 | 18.0 | 15.4 | 12.8 | 16.9 | 14.8 | 12.6 | 11.3 | |||||
| Imports | 16.6 | 17.5 | 17.8 | 17.9 | 18.0 | 15.4 | 12.8 | 16.9 | 14.8 | 12.6 | 11.3 | |||||
| Taxes on domestic transactions, o/w | 33.8 | 34.1 | 36.2 | 35.2 | 32.0 | 29.6 | 34.9 | 31.6 | 31.7 | 38.3 | 42.2 | |||||
| Value added ITBM | 14.8 | 14.8 | 17.1 | 18.8 | 19.4 | 18.6 | 24.4 | 21.6 | 21.1 | 26.7 | 29.3 | |||||
| Petroleum products | 10.3 | 11.0 | 10.4 | 8.3 | 5.2 | 4.9 | 4.3 | 3.5 | 4.2 | 3.1 | 2.6 | |||||
| Tabacco and Beverages | 3.2 | 3.0 | 3.3 | 2.9 | 3.3 | 2.7 | 2.9 | 3.4 | 3.3 | 5.2 | 7.0 | |||||
| Other | 5.5 | 5.4 | 5.4 | 5.1 | 4.1 | 3.4 | 3.4 | 3.0 | 3.1 | 3.2 | 3.3 | |||||
Capdr:VAT Revenue Growth, 2002-2011
(in percent)
Capdr:VAT Revenue Growth, 2002-2011
(in percent)
| 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Costa Rica | 11.8 | 11.4 | 19.9 | 22.1 | 29.2 | 27.3 | 17.4 | −11.3 | 10.8 | 11.9 |
| Dom Rep | 11.8 | 15.7 | 59.6 | 35.4 | 30.1 | 24.3 | 10.9 | −6.0 | 17.2 | 9.5 |
| El Salvador | 4.3 | 6.2 | 6.9 | 14.0 | 16.5 | 10.6 | 7.2 | −11.9 | 10.1 | 15.0 |
| Guatemala | 23.4 | 7.8 | 12.9 | 2.6 | 16.2 | 23.0 | 5.1 | −7.1 | 13.1 | 14.7 |
| Honduras | 10.7 | 21.6 | 15.5 | 15.1 | 20.9 | 22.8 | 15.8 | −12.5 | 11.5 | 18.2 |
| Nicaragua | 9.0 | 13.6 | 20.0 | 22.4 | 21.6 | 17.9 | 12.2 | −0.9 | 16.0 | 24.4 |
| Panama | 0.6 | 24.7 | 17.9 | 14.2 | 26.2 | 55.3 | 3.2 | 5.8 | 48.3 | 25.7 |
| Median | 10.7 | 13.6 | 17.9 | 15.1 | 21.6 | 23.0 | 10.9 | −7.1 | 13.1 | 15.0 |
Capdr:VAT Revenue Growth, 2002-2011
(in percent)
| 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Costa Rica | 11.8 | 11.4 | 19.9 | 22.1 | 29.2 | 27.3 | 17.4 | −11.3 | 10.8 | 11.9 |
| Dom Rep | 11.8 | 15.7 | 59.6 | 35.4 | 30.1 | 24.3 | 10.9 | −6.0 | 17.2 | 9.5 |
| El Salvador | 4.3 | 6.2 | 6.9 | 14.0 | 16.5 | 10.6 | 7.2 | −11.9 | 10.1 | 15.0 |
| Guatemala | 23.4 | 7.8 | 12.9 | 2.6 | 16.2 | 23.0 | 5.1 | −7.1 | 13.1 | 14.7 |
| Honduras | 10.7 | 21.6 | 15.5 | 15.1 | 20.9 | 22.8 | 15.8 | −12.5 | 11.5 | 18.2 |
| Nicaragua | 9.0 | 13.6 | 20.0 | 22.4 | 21.6 | 17.9 | 12.2 | −0.9 | 16.0 | 24.4 |
| Panama | 0.6 | 24.7 | 17.9 | 14.2 | 26.2 | 55.3 | 3.2 | 5.8 | 48.3 | 25.7 |
| Median | 10.7 | 13.6 | 17.9 | 15.1 | 21.6 | 23.0 | 10.9 | −7.1 | 13.1 | 15.0 |
CAPDR: Consumption Growth, 2002-2011
(in percent)
CAPDR: Consumption Growth, 2002-2011
(in percent)
| 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Costa Rica | 12.2 | 13.3 | 15.0 | 18.6 | 18.7 | 18.7 | 18.4 | 8.5 | 11.8 | 10.3 |
| Dom Rep | 12.2 | 31.3 | 45.3 | 18.4 | 17.5 | 15.4 | 22.3 | 4.0 | 15.8 | 12.5 |
| El Salvador | 2.7 | 5.8 | 7.3 | 9.6 | 9.8 | 10.9 | 8.1 | −8.6 | 4.8 | 8.3 |
| Guatemala | 9.9 | 8.5 | 9.6 | 11.3 | 10.6 | 13.7 | 15.8 | 1.8 | 8.7 | 10.3 |
| Honduras | 10.5 | 11.2 | 13.3 | 16.2 | 14.5 | 16.1 | 14.8 | 4.2 | 7.2 | 9.1 |
| Nicaragua | 7.7 | 8.3 | 13.3 | 14.9 | 12.7 | 15.0 | 24.3 | −0.8 | 11.2 | 12.7 |
| Panama | 8.8 | 1.2 | 12.0 | 5.7 | 8.0 | 8.1 | 7.0 | 1.7 | 28.9 | 14.9 |
| Median | 9.9 | 8.5 | 13.3 | 14.9 | 12.7 | 15.0 | 15.8 | 1.8 | 11.2 | 10.3 |
CAPDR: Consumption Growth, 2002-2011
(in percent)
| 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Costa Rica | 12.2 | 13.3 | 15.0 | 18.6 | 18.7 | 18.7 | 18.4 | 8.5 | 11.8 | 10.3 |
| Dom Rep | 12.2 | 31.3 | 45.3 | 18.4 | 17.5 | 15.4 | 22.3 | 4.0 | 15.8 | 12.5 |
| El Salvador | 2.7 | 5.8 | 7.3 | 9.6 | 9.8 | 10.9 | 8.1 | −8.6 | 4.8 | 8.3 |
| Guatemala | 9.9 | 8.5 | 9.6 | 11.3 | 10.6 | 13.7 | 15.8 | 1.8 | 8.7 | 10.3 |
| Honduras | 10.5 | 11.2 | 13.3 | 16.2 | 14.5 | 16.1 | 14.8 | 4.2 | 7.2 | 9.1 |
| Nicaragua | 7.7 | 8.3 | 13.3 | 14.9 | 12.7 | 15.0 | 24.3 | −0.8 | 11.2 | 12.7 |
| Panama | 8.8 | 1.2 | 12.0 | 5.7 | 8.0 | 8.1 | 7.0 | 1.7 | 28.9 | 14.9 |
| Median | 9.9 | 8.5 | 13.3 | 14.9 | 12.7 | 15.0 | 15.8 | 1.8 | 11.2 | 10.3 |
Panama: Tax Exemptions and Subsidies
(in million of US dollars)
Excluding ITBMS and other duties.
Incentives to non-traditional exports.
Tax credits, accumulated ITBMS.
Article 9, Law Nr. 3 of March 20, 1986.
The government had to temporary subsidize exporters as the Ministry of Commerce did not apply on time to receive lower tariffs from the European Union.
Fiscal loss coming from deductions applied to income declarations.
Law 44/90 and Law 6/2005 exempts from income tax.
Article 6, Law 28/95 from June 28, 1999 based on Law 20 of June 1999.
modfied every year based on filing of late exemptions.
Fiscal credit: subsidy for the price of 1 gas cilinder (25 pounds).
Article 68, Law 6/97 regarding electricity companies: exemption (Contrato la Nacion, Dec 22/98 (Art 86 and 87)).
Subsidy for imported fuel (diesel) to the public trasportation sector; benefits users by freezing the cost of a ticket.
Subsidy for electricity to households consuming less than 500KW (from the Tariff Stabilization Fund).
Panama: Tax Exemptions and Subsidies
(in million of US dollars)
| 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 2011 (p.) | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Exemptions of import duties/1 | 47.4 | 40.1 | 44.4 | 40.4 | 34.6 | 51.9 | 49.4 | 72.9 | 54.2 | 78.8 | 75.9 | ||
| Industry | 22.2 | 15.2 | 18.7 | 17.5 | 20.4 | 18.9 | 22.7 | 31.0 | 23.2 | 34.3 | 33.3 | ||
| Public sector | 6.7 | 5.5 | 5.4 | 6.3 | 2.4 | 2.2 | 3.9 | 5.5 | 7.6 | 12.3 | 15.9 | ||
| Embassies | 0.5 | 0.7 | 0.6 | 0.5 | 0.7 | 2.3 | 2.2 | 1.2 | 0.9 | 0.7 | 0.4 | ||
| International organizations | 0.9 | 0.4 | 0.6 | 1.2 | 2.7 | 2.1 | 1.1 | 1.2 | 2.6 | 1.7 | 1.5 | ||
| Corporations | 16.5 | 17.8 | 18.8 | 14.8 | 8.1 | 26.0 | 19.4 | 33.9 | 19.8 | 29.8 | 23.8 | ||
| Public transportation | 0.5 | 0.5 | 0.3 | 0.2 | 0.2 | 0.3 | 0.1 | 0.1 | 0.2 | 0.0 | 1.0 | ||
| Tax redemption certificates/2 | 41.4 | 33.4 | 23.9 | 23.1 | 18.5 | 40.8 | 25.3 | 18.2 | 20.4 | 18.9 | 3.4 | ||
| Tax anulment certificates/3 | 1.0 | 1.0 | 0.5 | 1.2 | 0.5 | 0.7 | 1.0 | 0.9 | 0.7 | 0.6 | 5.7 | ||
| Special tax anulment certificates/3 | 1.2 | 0.2 | 1.3 | 0.6 | 0.2 | 0.2 | 0.5 | 0.2 | 0.0 | 0.1 | |||
| Import duties devolution/4 | 0.4 | 0.4 | 0.4 | 0.1 | 0.1 | 0.1 | 0.2 | 0.0 | |||||
| Eurocertificates/5 | 2.6 | 2.0 | |||||||||||
| Agricultural export promotion certificates | 1.9 | 8.6 | |||||||||||
| Industry promotion certificates | 1.1 | ||||||||||||
| Income tax exemption/6 | 33.8 | 35.3 | 32.2 | 34.9 | 40.4 | 15.8 | 8.8 | 21.1 | 32.8 | 19.6 | 23.9 | ||
| Incentive: Construction | 3.4 | 2.6 | 2.6 | 1.5 | 3.1 | 1.5 | 0.8 | 0.5 | 0.6 | ||||
| Deforestation | 8.8 | 10.5 | 6.7 | 9.9 | 10.4 | 0.0 | 0.1 | 2.1 | |||||
| Handicap | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | 0.0 | 0.0 | 0.2 | 0.1 | 0.1 | ||
| Agriculture | 2.6 | 3.3 | 4.2 | 0.4 | 0.3 | 0.1 | 0.0 | ||||||
| Reinvestment | 11.3 | 11.4 | 8.7 | 11.6 | 9.7 | 3.4 | 4.8 | 11.2 | 16.2 | 11.4 | 16.5 | ||
| Tourism | 1.1 | 0.4 | 0.3 | 0.5 | 0.1 | 0.2 | 0.3 | 1.8 | 5.0 | 2.4 | 1.6 | ||
| Other incentives | 6.6 | 6.9 | 9.8 | 10.7 | 16.6 | 10.4 | 2.7 | 5.3 | 10.8 | 5.5 | 5.5 | ||
| Historic town(Casco Antiguo) | 0.0 | 0.0 | 0.0 | 0.1 | 0.0 | 0.3 | 0.1 | 0.2 | 0.1 | 0.1 | 0.2 | ||
| Real Estate tax exemption/7 | 13.1 | 13.4 | 14.2 | 12.2 | 12.8 | 10.7 | 15.6 | 10.7 | 23.5 | 16.4 | 24.3 | ||
| Income tax exemption/8* | 17.7 | 13.7 | 15.5 | 14.7 | 14.8 | 8.8 | 6.7 | 13.6 | 15.0 | 9.8 | 2.7 | ||
| Total incentives | 156.1 | 137.5 | 132.5 | 127.1 | 121.9 | 129.0 | 107.3 | 137.7 | 146.6 | 149.0 | 147.7 | ||
| Fiscal Credits/9* | 16.7 | 9.7 | 19.0 | 29.0 | 39.4 | 47.5 | 57.7 | 69.0 | 58.9 | 82.1 | 98.8 | ||
| Preferencial Interest * | 19.3 | 30.2 | 32.6 | 34.8 | 35.2 | 47.7 | 62.5 | 28.6 | 73.3 | 80.5 | 42.1 | ||
| Fuel tax exemption/10* | 30.7 | 35.1 | 30.7 | 24.5 | 23.5 | 31.2 | 48.8 | 37.7 | 52.9 | 47.2 | 12.2 | ||
| Bus subsidy/11* | 20.9 | 2.0 | 3.5 | 19.0 | 6.8 | 10.6 | 12.9 | ||||||
| Metro bus subsidy/11* | 3.4 | ||||||||||||
| Energy subsidy/12* | 26.0 | 72.0 | 44.3 | 84.7 | 95.9 | 66.1 | 108.9 | ||||||
| Total subsidies | 66.8 | 75.0 | 82.3 | 88.3 | 145.1 | 200.4 | 216.8 | 239.0 | 287.8 | 286.6 | 278.3 | ||
| Total | 222.9 | 212.5 | 214.8 | 215.5 | 266.9 | 329.4 | 324.1 | 376.7 | 434.4 | 435.5 | 426.0 | ||
| Percent of tax revenues | 21.5 | 20.2 | 19.1 | 17.8 | 19.9 | 18.7 | 15.5 | 15.4 | 16.5 | 14.1 | 12.0 | ||
| Incentives | 15.0 | 13.1 | 11.8 | 10.5 | 9.1 | 7.3 | 5.1 | 5.6 | 5.6 | 4.8 | 4.2 | ||
| Subsidies | 6.4 | 7.1 | 7.3 | 7.3 | 10.8 | 11.4 | 10.4 | 9.8 | 10.9 | 9.3 | 7.9 | ||
| Percent of GDP | 1.9 | 1.7 | 1.7 | 1.5 | 1.7 | 1.9 | 1.6 | 1.6 | 1.8 | 1.6 | 1.4 | ||
| Incentives | 1.3 | 1.1 | 1.0 | 0.9 | 0.8 | 0.8 | 0.5 | 0.6 | 0.6 | 0.6 | 0.5 | ||
| Subsidies | 0.6 | 0.6 | 0.6 | 0.6 | 0.9 | 1.2 | 1.1 | 1.0 | 1.2 | 1.1 | 0.9 | ||
Excluding ITBMS and other duties.
Incentives to non-traditional exports.
Tax credits, accumulated ITBMS.
Article 9, Law Nr. 3 of March 20, 1986.
The government had to temporary subsidize exporters as the Ministry of Commerce did not apply on time to receive lower tariffs from the European Union.
Fiscal loss coming from deductions applied to income declarations.
Law 44/90 and Law 6/2005 exempts from income tax.
Article 6, Law 28/95 from June 28, 1999 based on Law 20 of June 1999.
modfied every year based on filing of late exemptions.
Fiscal credit: subsidy for the price of 1 gas cilinder (25 pounds).
Article 68, Law 6/97 regarding electricity companies: exemption (Contrato la Nacion, Dec 22/98 (Art 86 and 87)).
Subsidy for imported fuel (diesel) to the public trasportation sector; benefits users by freezing the cost of a ticket.
Subsidy for electricity to households consuming less than 500KW (from the Tariff Stabilization Fund).
Panama: Tax Exemptions and Subsidies
(in million of US dollars)
| 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 2011 (p.) | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Exemptions of import duties/1 | 47.4 | 40.1 | 44.4 | 40.4 | 34.6 | 51.9 | 49.4 | 72.9 | 54.2 | 78.8 | 75.9 | ||
| Industry | 22.2 | 15.2 | 18.7 | 17.5 | 20.4 | 18.9 | 22.7 | 31.0 | 23.2 | 34.3 | 33.3 | ||
| Public sector | 6.7 | 5.5 | 5.4 | 6.3 | 2.4 | 2.2 | 3.9 | 5.5 | 7.6 | 12.3 | 15.9 | ||
| Embassies | 0.5 | 0.7 | 0.6 | 0.5 | 0.7 | 2.3 | 2.2 | 1.2 | 0.9 | 0.7 | 0.4 | ||
| International organizations | 0.9 | 0.4 | 0.6 | 1.2 | 2.7 | 2.1 | 1.1 | 1.2 | 2.6 | 1.7 | 1.5 | ||
| Corporations | 16.5 | 17.8 | 18.8 | 14.8 | 8.1 | 26.0 | 19.4 | 33.9 | 19.8 | 29.8 | 23.8 | ||
| Public transportation | 0.5 | 0.5 | 0.3 | 0.2 | 0.2 | 0.3 | 0.1 | 0.1 | 0.2 | 0.0 | 1.0 | ||
| Tax redemption certificates/2 | 41.4 | 33.4 | 23.9 | 23.1 | 18.5 | 40.8 | 25.3 | 18.2 | 20.4 | 18.9 | 3.4 | ||
| Tax anulment certificates/3 | 1.0 | 1.0 | 0.5 | 1.2 | 0.5 | 0.7 | 1.0 | 0.9 | 0.7 | 0.6 | 5.7 | ||
| Special tax anulment certificates/3 | 1.2 | 0.2 | 1.3 | 0.6 | 0.2 | 0.2 | 0.5 | 0.2 | 0.0 | 0.1 | |||
| Import duties devolution/4 | 0.4 | 0.4 | 0.4 | 0.1 | 0.1 | 0.1 | 0.2 | 0.0 | |||||
| Eurocertificates/5 | 2.6 | 2.0 | |||||||||||
| Agricultural export promotion certificates | 1.9 | 8.6 | |||||||||||
| Industry promotion certificates | 1.1 | ||||||||||||
| Income tax exemption/6 | 33.8 | 35.3 | 32.2 | 34.9 | 40.4 | 15.8 | 8.8 | 21.1 | 32.8 | 19.6 | 23.9 | ||
| Incentive: Construction | 3.4 | 2.6 | 2.6 | 1.5 | 3.1 | 1.5 | 0.8 | 0.5 | 0.6 | ||||
| Deforestation | 8.8 | 10.5 | 6.7 | 9.9 | 10.4 | 0.0 | 0.1 | 2.1 | |||||
| Handicap | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | 0.0 | 0.0 | 0.2 | 0.1 | 0.1 | ||
| Agriculture | 2.6 | 3.3 | 4.2 | 0.4 | 0.3 | 0.1 | 0.0 | ||||||
| Reinvestment | 11.3 | 11.4 | 8.7 | 11.6 | 9.7 | 3.4 | 4.8 | 11.2 | 16.2 | 11.4 | 16.5 | ||
| Tourism | 1.1 | 0.4 | 0.3 | 0.5 | 0.1 | 0.2 | 0.3 | 1.8 | 5.0 | 2.4 | 1.6 | ||
| Other incentives | 6.6 | 6.9 | 9.8 | 10.7 | 16.6 | 10.4 | 2.7 | 5.3 | 10.8 | 5.5 | 5.5 | ||
| Historic town(Casco Antiguo) | 0.0 | 0.0 | 0.0 | 0.1 | 0.0 | 0.3 | 0.1 | 0.2 | 0.1 | 0.1 | 0.2 | ||
| Real Estate tax exemption/7 | 13.1 | 13.4 | 14.2 | 12.2 | 12.8 | 10.7 | 15.6 | 10.7 | 23.5 | 16.4 | 24.3 | ||
| Income tax exemption/8* | 17.7 | 13.7 | 15.5 | 14.7 | 14.8 | 8.8 | 6.7 | 13.6 | 15.0 | 9.8 | 2.7 | ||
| Total incentives | 156.1 | 137.5 | 132.5 | 127.1 | 121.9 | 129.0 | 107.3 | 137.7 | 146.6 | 149.0 | 147.7 | ||
| Fiscal Credits/9* | 16.7 | 9.7 | 19.0 | 29.0 | 39.4 | 47.5 | 57.7 | 69.0 | 58.9 | 82.1 | 98.8 | ||
| Preferencial Interest * | 19.3 | 30.2 | 32.6 | 34.8 | 35.2 | 47.7 | 62.5 | 28.6 | 73.3 | 80.5 | 42.1 | ||
| Fuel tax exemption/10* | 30.7 | 35.1 | 30.7 | 24.5 | 23.5 | 31.2 | 48.8 | 37.7 | 52.9 | 47.2 | 12.2 | ||
| Bus subsidy/11* | 20.9 | 2.0 | 3.5 | 19.0 | 6.8 | 10.6 | 12.9 | ||||||
| Metro bus subsidy/11* | 3.4 | ||||||||||||
| Energy subsidy/12* | 26.0 | 72.0 | 44.3 | 84.7 | 95.9 | 66.1 | 108.9 | ||||||
| Total subsidies | 66.8 | 75.0 | 82.3 | 88.3 | 145.1 | 200.4 | 216.8 | 239.0 | 287.8 | 286.6 | 278.3 | ||
| Total | 222.9 | 212.5 | 214.8 | 215.5 | 266.9 | 329.4 | 324.1 | 376.7 | 434.4 | 435.5 | 426.0 | ||
| Percent of tax revenues | 21.5 | 20.2 | 19.1 | 17.8 | 19.9 | 18.7 | 15.5 | 15.4 | 16.5 | 14.1 | 12.0 | ||
| Incentives | 15.0 | 13.1 | 11.8 | 10.5 | 9.1 | 7.3 | 5.1 | 5.6 | 5.6 | 4.8 | 4.2 | ||
| Subsidies | 6.4 | 7.1 | 7.3 | 7.3 | 10.8 | 11.4 | 10.4 | 9.8 | 10.9 | 9.3 | 7.9 | ||
| Percent of GDP | 1.9 | 1.7 | 1.7 | 1.5 | 1.7 | 1.9 | 1.6 | 1.6 | 1.8 | 1.6 | 1.4 | ||
| Incentives | 1.3 | 1.1 | 1.0 | 0.9 | 0.8 | 0.8 | 0.5 | 0.6 | 0.6 | 0.6 | 0.5 | ||
| Subsidies | 0.6 | 0.6 | 0.6 | 0.6 | 0.9 | 1.2 | 1.1 | 1.0 | 1.2 | 1.1 | 0.9 | ||
Excluding ITBMS and other duties.
Incentives to non-traditional exports.
Tax credits, accumulated ITBMS.
Article 9, Law Nr. 3 of March 20, 1986.
The government had to temporary subsidize exporters as the Ministry of Commerce did not apply on time to receive lower tariffs from the European Union.
Fiscal loss coming from deductions applied to income declarations.
Law 44/90 and Law 6/2005 exempts from income tax.
Article 6, Law 28/95 from June 28, 1999 based on Law 20 of June 1999.
modfied every year based on filing of late exemptions.
Fiscal credit: subsidy for the price of 1 gas cilinder (25 pounds).
Article 68, Law 6/97 regarding electricity companies: exemption (Contrato la Nacion, Dec 22/98 (Art 86 and 87)).
Subsidy for imported fuel (diesel) to the public trasportation sector; benefits users by freezing the cost of a ticket.
Subsidy for electricity to households consuming less than 500KW (from the Tariff Stabilization Fund).
References
Albino-War, M. and Cubero, R., 2008, “Globalization, Economic Integration and Tax Structures in Central America,” Seventh Annual CAPDR Regional Conference.
Desruelle, D. and Schipke, A., 2008, “Central America: Economic Progress and Reforms”, Departmental Paper No. 08/01 (Washington: International Monetary Fund).
Dos Santos, P., 1994, “Administration of Large Taxpayers”, IMF, Fiscal Affairs Department.
IDB/CIAT/CAPTAC-DR, 2012, “Estado de la Administración Tributaria en América Latina”, Regional Study.
Fenochietto, R., 2011, “Las Reformas tributarias en América Central, Panamá and y Republica Dominicana en 2009 y 2010,” IMF, Fiscal Affairs Department, a note.
Gnazzo, E. and J., Gomez-Sabaini, 2004, “El Sistema Tributario de Panamá: Reformas Pendientes,” Interamerican Development Bank, Technical Assistance Report.
Gomez-Sabaini, J., 2009, “Panamá: Consideraciones Metodológicas y Estimación de los Gastos y del Coeficiente de Cumplimiento de ITBMS,” Interamerican Development Bank.
Gordon, R. K. and Thuronyi, V., 1996, “Tax Legislative Process,” IMF, Tax Law Design and Drafting, Volume 1.
International Monetary Fund, 2011, “Revenue Mobilization in Developing Countries,” IMF Policy Paper. Available at http://www.imf.org/external/pp/longres.aspx?id=4537.
Baer, K., Benon, O. and Toro., 2002, “Improving Large Taxpayers’ Compliance: A Review of Country Experience”, IMF Occasional Paper No. 215 (Washington: International Monetary Fund).
McCarten, W., 2004, “Focusing on the Few: The Role of Large Taxpayer Units in the Revenue Strategies of Developing Countries,” World Bank, second draft.
Pessino, C. and Fenochietto, R., 2010, “Determining Countries’ Tax Effort,” Hacienda Pública Española / Revista de Economía Pública, Instituto de Estudios Fiscales, 195: 65–87.
Stotsky, J. and Wolde-Mariam, A., 2002, “Central American Tax Reforms: Trends and Possibilities,” IMF Working Paper No. 02/227 (Washington: International Monetary Fund).
Verreydt, E., 2005, “Tax Policy and Performance,” Panama: Selected Issues and Statistical Appendix, Chapter 3, IMF Country Report 06/3 (Washington: International Monetary Fund).
Prepared by Svetlana Vtyurina.
Revenue enhancing measures were particularly necessary to reduce the high deficits of mid-2000, and to finance an ambitions public investment program starting 2010.
All the reforms reflected the view that personal income was excessively taxed, in particular low incomes.
Taxes adjust downwards when the market price of gasoline increases above the established threshold. The budget recuperates the subsidy when the price goes below the threshold.
The ITBMS (Impuesto a la Transferencia de Bienes Muebles y Prestaciones de Servicios) is a value-added tax.
A value greater (smaller) than unity implies a rising (declining) tax-to-GDP ratio.
The lack of buoyancy or its stability in spite of rising GDP may be in part due the low elasticity (buoyancy with unchanged tax laws and regulations) of the tax system, owing to remaining loopholes in tax legislation and regulations, special tax regimes, tax evasion, and weaknesses in tax administration, which shield fast growing sectors from taxes.
There are, however, several shortcomings to this measure: (1) there is a bias towards countries with multiple rates as a standard rate is used in the calculation, (2) any mis-measurement of final consumption (likely reflecting a mis-measurement of GDP, and indeed the GDP series, is being revised upwards) would also translate into a mis-measurement of the VAT productivity (in fact in many CAPDR countries GDP is believed to be underestimated).
While tax capacity represents the maximum tax revenue that a country can collect given its economic, social, institutional, and demographic characteristics, tax effort is the relation between the actual revenue and this tax capacity.
For example, the latest 2009-10 reform was expected to yield 2.5 percent of GDP against the estimated actual 1.8 percent. Previous reforms were expected to permanently increase tax collections by 1-2.2 percent of GDP.
The IMF has not provided technical assistance in the area of revenue administration to Panama for several years due to a lack of demand. Since mid-2010, the regional technical assistance center, CAPTAC-DR, through the resident expert and short-term expert assignments, has identified significant weaknesses in tax administration which contributed to low collections and tax evasion. First diagnostic mission from the IMF to define an overall strategy for tax administration reform took place in December 2011.
The Inter-American Development Bank (IDB) has been working on a program to improve the tax system, in coordination with the Interamerican Center for Tax Administration (CIAT). The CIAT made proposals in 1999 to simplify Panama’s tax system. Simplification of the tax structure was recommended to increase efficiency in tax administration, strengthen tax collections and reduce tax evasion. Regarding direct taxes, a key proposal was to limit tax incentives and other exemptions on corporate income, while decreasing personal income taxation. On indirect taxes, the report recognized that the rate of the ITBM (5 percent) was the lowest VAT-type rate in Latin America. However, since raising the rate was deemed politically difficult, it recommended widening the base to include selected services. Some of its recommendations were taken on board in the recent reform design.
In Uruguay, large taxpayers showed a late filing rate of more than 10 percent before the large taxpayer monitoring system became operational; the rate has since been reduced to less than 3.8 percent. There was also a 22 percent increase in the VAT revenue in constant terms over a two-year period (Dos Santos, 1994).
For example, before 2002, tax evasion for ITBMS on domestic sales was estimated to be 40 percent of collected revenue, or 0.3 percent of GDP (CIAT). According to the IDB/CIAT report (2012), Panama, however, scored well however in collecting of past due debts, with a ratio of 56.3 percent against an average of 26.8 percent.
According to the IDB/CIAT report (2012), DGI has the smallest budget in nominal U.S. dollar terms, and lowest administrative costs among a sample of Latin American countries, at 0.5 percent of collections against an average of 1.4 percent. There is also a very high turnover, with staff with less than 5 years of tenure comprising more than 50 percent of total.
However, in August 2012, the National Assembly approved amendments/corrections to the Tax Code, including (1) exempting certain sums generated by the payment of preferred stock income tax (ISR), (2) replacing the monthly advance income tax (Amir) by the previously used system, (3) imposing a selective consumption tax (ISC) to electronic equipment to offset tax losses after elimination of the import tariff, and (4) exempting income from agricultural activity earning no more than US$300,000 per year.
