Panama’s Ministry of Finance recently issued Executive Decree No. 173, which amends the requirements for taxpayers to be designated as withholding agents for VAT (ITBMS) purposes. The main change is a reduction in the threshold for being designated as a VAT withholding agent from PAB (USD) 5 million in acquired goods or services in the previous year to PAB (USD) 3 million. As designated withholding agents, taxpayers must withhold 50% of the VAT (ITBMS) included in the invoices issued to them by each supplier, and remit the amount withheld to the Directorate General of Revenue (DGI). Executive Decree No. 173 also provides that a taxpayer without legal status that is designated as a withholding agent, such as an association or joint venture, may make a request to the DGI to reduce the withholding percentage when it has accumulated VAT credits for the last 6 consecutive periods due to its status as a withholding agent.
In connection with the changes, the DGI has issued Resolution No. 201-7951, which lists the designated VAT (ITMBS) withholding agents with effect from 1 January 2022. Further information on VAT (ITMBS) withholding can be found on the DGI website.
Source Orbitax
