I am very happy to see that the government still plans on implementing the flat tax system. This will be a big boon to business and a simplification of the existing and confusing tax system currently in place.
The government has given a new setback to the filing of tax reforms, whose most important change would be the replacement of Alternative Calculation of Income Tax (CAIR) by applying a flat tax (flat rate or only).
The original plan was to introduce this reform last October, but then the long process of discussion and generated positions against last fiscal adjustment law adopted last September, the Ministry of Finance reported that the tax changes "integral" would postponed to 2010.
However, the president, Ricardo Martinelli, said the Panamanian tax change will model during the special sessions of the National Assembly, scheduled for the recess of the legislature in November and December.
Deputy Finance Minister, Dulcidio Guard, said the new initiative are reviewing the alternative calculation of income tax, lower tax rate on income of individuals and corporations across the flat tax and elimination of various taxes that have little revenue, but would not specify.
The official said he had met with the industry to explain some ways to achieve increased effective rate of tax.
With just days to the end of November, the official said they are committed to the private sector to review the reform before it is submitted to the Assembly. However, business associations are concerned about the dimension of the reforms against time for consultations.
Ruben Castillo, president of the Panamanian Association of Business Executives (APED), said the tax issue is difficult, complicated and technical and can not "move quickly", referring to the discussion in the Assembly.
Hopes that the reform is stable so it does not send a bad signal to investors that the revenue generated is invested not in form.
Adolfo Linares, president of the Chamber of Commerce and Industry, suggested that points to a genuine fiscal policy to avoid falling into a purely tax collection reform parameters.
For Gaspar García de Paredes, president of the National Business Council (Conep), fiscal policy must meet the mission of maintaining the vitality of the economy, instead of collecting more taxes and lose taxpayers.
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