On 27 July 2020, Panama’s National Assembly submitted two draft bills that contain measures in response to the Covid-19 pandemic.
The bill No. 358 provides reduced income tax rates for companies and individuals qualifying as SMEs that would apply from the 2020 fiscal year, subject to the three conditions, i.e. the SME is registered as such before the authority; the SME is composed of individuals; and gross annual income not more than PAB 500,000.
The draft bill contains following progressive rates for qualifying SMEs:
| Thresholds | Tax Rates (For companies considered as SMEs) | Tax Rates (For individual considered as SMEs) |
| Up to PAB 11,000 | 7.50% | 7.50% |
| PAB 11,000.01 up to 36,000 | 10.00% | 10.00% |
| PAB 36,000.01 up to 90,000 | 12.50% | 12.50% |
| PAB 90,000.01up to 150,000 | 15.00% | 15.00% |
| PAB 150,000.01up to 350,000 | 20.00% | 20.00% |
| PAB 350,000.01 up to 500,000 | 22.50% | 22.50% |
The bill No. 359 provides certain tax payment relief measures includes a 10% reduction on the payment of income tax, business license tax, complementary tax, and real estate for both individuals and companies, subject to three conditions i.e. gross annual revenue not more than PAB 2.5 million; the standard due date for payment of taxes is between 20 March and 31 July 2020; and the relevant taxes are paid within 3 months of the enactment of the bill.
This bill also provides an installment agreement option for tax debts due between 20 March and 31 July 2020 that provides for the waiver of penalties, surcharges and interest. Application for an installment agreement would need to be completed by 31 December 2020 and payments to be made by 30 April 2021.
