- Panama is considering changes to how certain digital purchases and services are taxed
The Cabinet Council approved Bill 30-26, a proposal that seeks to update Panama’s Tax Code and potentially apply the existing 7% ITBMS (Tax on the Transfer of Movable Personal Property and the Provision of Services) to certain digital transactions used, consumed, or accessed within Panama.
The proposal has been submitted to the National Assembly for consideration, meaning it is not currently in effect and may still be modified during the legislative process.
What Digital Services Could Be Affected?
If approved in a similar form, the measure could potentially apply to certain services and transactions involving:
- E-commerce and online shopping platforms
- Streaming and digital subscription services
- Accommodation platforms
- Transportation applications
- Other services provided through digital platforms
The final scope will depend on the version ultimately approved by the National Assembly and any subsequent regulations.
What Could This Mean for You?
If the proposal becomes law with the contemplated 7% rate, qualifying digital purchases or services could become approximately 7% more expensive for consumers in Panama.
For example:
Digital service or purchase: $100
ITBMS (7%): $7
Total: $107
However, this does not mean that every online purchase or digital platform will automatically be subject to the tax.
How Would Panama Determine Whether the Tax Applies?
The proposal considers several indicators to determine whether a digital service is being used or consumed within Panama, potentially including:
- Billing address
- Location of the bank account or payment method
- User’s IP address
- Country code associated with the user’s SIM card
- Other factors reasonably connected to the consumer’s location
Why Is Panama Considering This Change?
The initiative is intended to modernize Panama’s tax framework as the digital economy continues to grow.
According to the proposal’s justification, the measure seeks to create greater tax equity between traditional businesses and digital platforms while strengthening tax collection and reducing potential gaps in the taxation of digital transactions.
Government estimates associated with the initiative indicate that the measure could generate more than $100 million annually in additional tax revenue, although actual collections would depend on the final legislation and its implementation.
Important: This Is Not Law Yet
Bill 30-26 remains a legislative proposal.
It must go through the National Assembly’s legislative process before becoming law, and its provisions may be amended along the way.
Consumers should therefore be cautious with claims suggesting that a new 7% charge is already being applied universally to platforms such as Amazon, Netflix, or other digital services as a result of this proposal.
One Diversity will continue monitoring developments that may affect living, investing, and doing business in Panama.
Sources consulted: Cabinet Council of Panama, Ministry of Economy and Finance (MEF), National Assembly of Panama, and national media reports.
