Panama: Tax Procedure Code enacted
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Panama: Tax Procedure Code enacted

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The Republic of Panama recently enacted Law 76 of February 13 2019 (Law 76 or Tax Procedure Code), through which the new tax procedure code is approved. This new Tax Procedure Code, which will come into effect on January 1 2020, does not replace the Tax Code, but rather establishes the basic principles and the fundamental rules that constitute the legal regime of the Panamanian tax system and is applicable to all national taxes.

One of the most important aspects that legislators tried to accomplish in the Tax Procedure Code was to level the playing field by providing a better framework through which to regulate the relationship between the Panamanian tax authority (Dirección General de Ingresos) and the taxpayer. Before the approval of Law 76, the existing legal framework did not set forth clear rules and guidelines for the tax authority to provide the taxpayers with basic constitutional rights and principles. To this end, besides providing taxpayers with the legal framework and mechanisms to assert such rights and principles before the tax authority, the Tax Procedure Code also created the Defensoría del Contribuyente. The latter is an independent entity ascribed to the Executive Branch, whose purpose is to assure that taxpayers' rights and guarantees are being observed by the Panamanian tax authority, in accordance with the Tax Procedure Code.

Some other matters regulated by the Tax Procedure Code are listed below:

  • It introduces and defines the concepts of criminal tax fraud, administrative tax evasion and tax avoidance; and,

  • It introduces a binding effect, only applicable for the Panamanian Tax Authority, over the opinions it issues based on enquiries made by taxpayers, only if such opinion is beneficial to the tax payer. The binding effect of the opinion will only apply in relation to the specific matter about which the enquiry was made.


Juan Francisco Moreno C

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