On August 2, 2022, members of the Bocas del Toro business community gathered for a meeting called by the DGI (Dirección General de Ingresos), the government organization responsible for tax collection. Some of the organization’s top agents were visiting from Panama City, including national director Publio De Gracia.
The nature of their visit was to conduct informal inspections of businesses in the area and to address what they characterized as a lack of compliance of Bocas del Toro businesses in regards to protocols of reporting transactions. The DGI is stressing an approach of dialogue and education, rather than fines and penalties. However, they mentioned that there have been a few visits in the last year, and that time for dialogue and education is running out. Everything indicates that the early August inspections were the last “preventative visit” by the DGI and next time there will be fines issued for noncompliance.
The new tax legislation centers around Law 256 of November 26, 2021, which has been effective since July 2022, so businesses could currently be fined for infractions. The law requires most tax payers to report all of their sales electronically with one of three approved methods, as opposed to merely giving traditional paper receipts to customers. The systems are electronic, connected to the internet and reported directly to the DGI year round.
There are exceptions to this law in the case of the more remote villages with difficult access, the ones that often lack telephone and internet coverage, as well as certain activities like water taxis, of which paper receipts will still be acceptable when declaring income and expenses. However, most operations, the vast majority of industry in our community, are now required to report transactions electronically.
So how did the businesses of the archipelago of Bocas del Toro do during the DGI’s informal inspections? “Out of the 27 businesses we visited yesterday, two and half are in compliance,” said Francisco Acuña of the DGI.
Acuña noted that supermarkets, restaurants and luxury hotels were among the businesses that seem to be committing the boldest infractions; hotels not reporting transactions on rooms that cost several hundred dollars per night, supermarkets and restaurants not giving receipts to customers, not having their machines hooked up to the national system, supermarkets evading alcohol taxes by ringing up cases of beer and bottles of wine as viveres, or “groceries” were some of the examples mentioned. One agent even recalled a “colorful” incident where he was run out of a local supermarket by an elderly lady with a machete upon giving them some post-inspection notes…
As far as we know, no fines were given, however there were businesses that were cited with warnings and at least some were left with a sign outside their establishment from the DGI signaling the agency’s official warning.
We sat down with local esteemed CPA Natasha MaFarlane of NM Servicios Contables and she helped clarify what these new laws are, how they affect business operations and what to do in order to avoid being penalized. Under the new tax law, there are three options to comply.
Electronic Billing Systems Required for Business Activity in Panama as of July 2022
1. Facturador Gratuito – Any business that generates less than 200 invoices per month and less than $1,000,000 per year in gross income can report with this method. The business must be previously registered with the DGI and all that is necessary is to request an account with this link, the “Declaración Jurada de Adopción al Sistema de Factura Electrónica” via the e-Tax 2.0 platform. It is something simple to do with your accountant. Once the request is made, businesses that qualify are approved in a matter of a few hours and can begin registering their sales electronically at that time. Once registered, the system can be accessed with this link to report your sales. You can use this method with any computer, mobile device or tablet connected to the internet, without buying any special equipment or software.
2.Cash Register with Communication Device or Data Transmission – Businesses can continue using government approved “equipo fiscal” cash registers, as long as they connecting a transmission device that connects the cash register to the Internet so that the “Z reports” (register closeouts) are communicated directly to the DGI. If your current cash register cannot adapt the device, it is recommended that you buy a new register that complies with what is required by law.
3. Proveedor Autorizado Calificado (PAC) – This method is reserved for the largest businesses, the ones usually having multiple branches, where the government allows for integration with their internal accounting system.
According to MacFarlane, most of the businesses in Bocas del Toro either fall into the category #1 or #2. She has also observed some confusion with one detail. If a business has an annual income of less than $36,000, it is not required to pay the ITBMS 7% sales tax. Some are thinking that this exception also removes their responsibility to bill electronically, however that is not the case. The exceptions are limited to remote villages and specific economic activities.
There are many businesses that do have their government approved “equipo fiscal” cash register, however where they are failing to comply is that they do not yet have the transmission device necessary to connect to the DGI’s system. There are also a lot of businesses that have the proper cash register and also have the transmission device installed, however they have not yet been officially registered in the system (PLACEF). Apparently there was a lack of communication from many of the suppliers of the transmission devices, where they needed to ask the businesses administrators or their accountants for some data to enter the system and this was not done on time.
Fortunately, during the August 2nd meeting, the Director of the DGI, Publio De Gracia, announced that the fines related to transmission issues of the devices were not going to be applied on this occasion, but that the DGI will not be giving any more opportunities.
The government approved cash registers and the transmission devices can be ordered from the following suppliers:
Total Electronic Services, TES
When will the next inspections be and when are businesses in jeopardy of being penalized?
The law is in effect now and it sounds like the next inspections can be as soon as late August. It’s important to note that on the week September 27, 2022 there will be a training session led by the DGI to inform the community on how to operate under the new electronic billing laws. Stay tuned to our social media for more details on the exact time and location of the training session.
Whenever the next DGI inspections will be, it is safe to assume that they will not be 100% preventative in nature. Fines for first offense penalties range from $100 to $1,000 and the second offense can be up to $5,000. Tax officials are also making their rounds on the internet; investigating businesses advertising their services as being located in Bocas del Toro listed on Booking.com, Air B & B, Google Maps, social media, etc.
Another important notice for all taxpayers: the deadline to update your RUC expires on August 31, 2022. If you have a corporation or are a natural person, you should contact your accountant or your lawyer and verify that the RUC is updated, otherwise , you will not be able to do any paperwork online and you can also be fined.
Don’t face Panama’s changing tax legislation on your own!
As much as The Bocas Breeze has researched these new procedures to craft this report and to understand our own tax situation, we recommend that every business consult with a professional accountant who can assess your situation and make sure you are up to date with what is required with current tax laws.
NM Servicios Contables offers consultations in English and Spanish, as well as monthly bookkeeping services. You can even hire their services once a year for your income statement (“declaracion de renta”) and taking care of annual corporate taxes.
Contact Natasha McFarlane, CPA, for all your bookkeeping, accounting and tax service needs in Panama email@example.com
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