MOST IMPORTANT ASPECTS – LAW 66 OF OCTOBER 2017
Among the most important changes introduced by Law 66 of October 2017, the following stand out:
1. The introduction of the figure of “Family Tax Patrimony or Main Home” .
To establish a property with this new condition, a sworn statement will be submitted to the General Directorate of Income. The property can be in a personal or legal name.
The assets that constitute Tax Family Patrimony or Main Home, may not be subject to increase in cadastral value through appraisals by any State agency. Voluntary appraisal may only be applied at the request of the owner, after cancellation of the tax benefit of the Family Tributary Heritage or Main Home.
2. Rate adjustment based on the property’s value range .
As of January 1, 2019, Real Estate Taxes in Panama will be paid based on the rates of Law 66 of October 2017 :
The exemption will be permanent, every 5 years the State will review the exempt tax base, in order to increase the exonerated $ 120,000 cadastral value, taking into account the taxable capacity and inflationary effects.
Fines and penalties of $ 1,000 to $ 10,000 will be generated if it is verified that the cadastral value has been divided or that the Tax Family Estate or Main Home has been simulated.
3. Exemption from payment of property tax for the first purchase of a home.
The first home purchase declared as Tax Family Patrimony or Main Home, whose value is between $ 120,000 to $ 300,000, is exonerated for three years.
Properties that are currently exempted by other laws will maintain this benefit until expiration, even after Law 66 of October 2017 enters into force.
Properties under the PH regime with exemption, will continue to pay 1% of the cadastral value of the land. They can opt for the benefit of Tributary Family Patrimony or Main House of Law 66, in order not to pay land tax.
The exemptions provided for in Law 28 of 2012 of 5, 10 and 20 years to new properties (according to their cadastral value), will be granted to constructions in process or that have obtained the construction permit until December 31, 2018.
4. Banks will act as withholding agents
For assets with a mortgage, which are not declared as Tax Family Patrimony or Main Home, the banks will act as withholding agent for the property tax.
The tax will be paid in 3 installments: April 30, August 30 and December 31. Payments after these dates will have a 10% surcharge and a 10% discount if the full year is paid before March 1.
We are attentive and waiting for the specific regulations and instructions to apply the procedures associated with Law 66 of October 2017, in a future installment.