Now the IMF is happy and soon the OECD will be happy. Why is their happiness so troublesome to me? Well maybe it is because they are made up of a bunch of countries who are taxing their citizens into poverty and the purpose of their loans to small countries is a way to get them into dependency, just like drug dealers. Overall I am not so concerned about the recent Panama tax reforms as much needed infrastructure is being constructed all over the country, but it does concern me when Panama becomes a debtor nation to these unelected international body's.
In its latest Article IV consultation with Panama, the International Monetary Fund (IMF) described recent tax reforms and added its support together with some advice about future medium term financial forecasting. In his first year in office, President Martinelli had enacted two far-reaching tax reforms, said the IMF. With these reforms, Panama’s tax system had increased its reliance on indirect taxes, reduced income tax rates, improved dividend taxation, and was modernizing its tax administration. The IMF expected the reforms to increase government revenue by 2.25% of GDP on a permanent basis. The IMF described the first tax reform, which was approved in September 2009. It broadened the tax base, changed tax rates on specific sectors, increased license fees and enhanced tax administration. The changes made the Colón Free Zone, casinos, maritime transportation, and oil trade subject to a more comprehensive corporate and dividend taxation treatment, while taxing profits from some foreign operations. In addition, the IMF said the reform levied taxes on real estate transactions, including capital gains on the sale of property, and brought bank commissions under VAT coverage. The second tax reform was characterized by lower personal and corporate income tax rates, a higher VAT rate, and additional improvements to tax administration, according to the IMF. The rates of personal income tax (PIT) were lowered from 20–27% to 15–25% and the exempted income threshold level was raised from 1.1 to 1.4 times income per capita. The rate of the corporate income tax (CIT) was lowered from 30% to 25% over two years, and over 4 years for some sectors (telecommunications, banking, electricity, insurance and casinos), said the IMF. The IMF said most personal expenditure deductions were eliminated and the corporate expenditure calculation method was modified, notably for the financial sector. The minimum alternative tax rate was also lowered while the standard rate of the VAT was increased from 5% to 7%, said the IMF.
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