Big news for property owners in Panama affected by recent legislation on property taxes. After a lengthy session of the Panamanian National Assembly, an extension was approved for the moratorium placed on penalties for property owners who own late real estate taxes. This moratorium was extended to December 31st, giving these property owners who haven’t paid the tax the ability to do so without penalties or added interest. This is good news for many in Panama. According to a press release from the National Assembly “the moratorium extends to interest, fines and surcharges that are generated by the non-payment of the single rates of private companies and foundations constituted and duly registered in the Republic of Panama.”
What are the origins for the moratorium on these types of property taxes?
Panama has made some aggressive moves in recent years to try and increase state-based revenues, specifically in the municipalities, to help improve fiscal budgets for towns and cities with real estate booms. This income is coming directly from property taxes, and is deemed necessary in order to help pay off the government’s deficit, which sits at $1.6 billion dollars, equivalent to 1.6% of the gross domestic product (GDP) and represents an increase of $ 966 million compared to the balance of the first half of the previous year. Overall, property taxes in Panama remain relatively low by comparable regional and global standards.
Clearing out a big chunk of this fiscal debt is critical to Panama’s economy, even if it costs Panama’s property owners. Logging back taxes without payment is a high-risk gamble, which is why Panama is putting so much importance about reeling it in, and enforcing more fiscal responsibility in the public sector. Luckily, the moratorium extension will give people with back taxes more time to get up to date.
Some basic info on Panama’s Property Taxes
Panama Real Property Tax applies to the value of the land and all registered improvements which are not exonerated. Here is a list of Panama real estate tax rates:
Panama Real Estate Tax Rates (Property Tax):
The first $30,000 USD is exempt.
Between $30,000 up to $50,000 have a rate of 1.75%.
Between $50,000 and $75,000 have a rate of 1.95%; and
Everything over $75,000 has a rate of 2.1%.