SME and their ITBMS TAX obligations
For small and medium-sized companies in Panama, the Transfer Tax on Personal Property and Services (known by the Spanish acronym of ITBMS) is similar to the value-added tax that exists in other countries.
The following are some important aspects that small and medium-sized companies should take into consideration:
- REGISTRATION: When the annual income of the companies exceeds USD$36,000.00, they must register as a taxpayer of the ITBMS with the Directorate General of Income (DGI);
- BILLING AND DECLARATIONS: Companies must issue invoices that include the ITBMS in their sales of goods and services;
- ITBMS RATES: In Panama, there are different ITBMS rates: 7%, 10%, and 15%. It is important that small and medium-sized companies know what rates apply to their products or services;
- EXEMPTIONS AND REDUCED RATES: Some goods and services are exempt from the ITBMS, while others may have reduced rates. The companies should be informed on the exemptions and reduced rates applicable to their business in order to properly comply with the tax regulations;
- TAX ADVICE: Due to the complexity of the tax legislation and possible updates, it is advisable to seek tax advice to ensure correct compliance with the obligations related to the ITBMS and other taxes.