DGi has announced a slight softening of its stance requiring all operating entities in Panamá to invest in special printers and the related software to create invoices, which will be periodically monitored and reported to DGi in their aggressive attempts to assure that everyone pays the ITBMS and properly records their sales revenues. All this thanks to Law 8 of 15 March 2010 which modified Law 76 of 22 Dec 1976. Invoices that are not produced using these new methods will not be deductible by the purchasers as expenses.

This new law essentially is aimed at the M/S and all SAs whether they have an Aviso de Operaciones or not.  Street vendors and licensed professionals who practice medicine, law, accountancy, dentistry or veterinary medicine, or plumbers, electricians etc as individuals or in a civil society are exempted,  as well.  But if the Dr or Vet or electrician sells products they are not exempted.  Or if they operate their practice as an SA they fall under the new rules.   DGI is even threatening to post monitors outside mini supers and if the customer can’t produce a register receipt for their purchase, the DGI monitor will levy the 7% ITBMS on the customer, with a one Balboa minimum fine. 

Individuals or SAs that rent a property to a tenant under a registered lease with MIVI or a private contract are exempt from purchasing these printers to produce invoices.  However, if the property is managed through a third party, the rules are different.  The owner may be required to invest in an approved printer or may be able to merely provide the tenant with a sales receipt for their monthly payment.  Airlines, hotels and the utilities have been negotiating with DGi to avoid having to completely revamp their extensive billing systems.  Other groups are gathering forces to negotiate with DGi but the small independent business owners lack any negotiating position and are going to have to surrender and comply.

There is a great deal of concern among the business community that the demands of DGi are a) unrealistic and unattainable, and b) disproportionately expensive for small business.  The Camara de Comercio e Industrias has been arguing for months that modification of these rules are necessary and fair.  To demand that every small business invest nearly $2,000 in an overpriced printer and software modifications – regardless of its profitability or whether it is required to collect and submit ITBMS – seems irrational and harsh at the very least, and will likely result in some small business operators simply deciding that the efforts of Panamá to demonstrate that it is not a tax haven is not worth staying in business. DGis response has been to promise a tax credit up to $850 for any small business doing less than $36,000 a year (the level at which the business becomes liable to collect and remit ITBMS).  The obvious problem is that it’s a tax credit not a payment so if the business has less $5,700 of taxable income the credit won’t be of any economic benefit and the small business is still going to have to pay out almost $2,000 and buy a periodic maintenance contract from the vendor. 

There has been some recognition by DGi of the fact that the vast numbers of printers and cash registers are far too numerous for the dozen or so new businesses formed to market these products to meet the legislated demand of the Panama business community.  They simply could not possibly provide the thousands of business entities equipment in sufficient numbers to meet DGi’s initial demands that these special  printers be in place by 1 October.

So far, all DGi has shown any willingness to do is defer the implementation of these special devices, starting with business using cash registers without existing software.  Slightly different timelines are now in place depending on whether the business already has cash registers and software, or thermal printers or laser printers but the implementation schedule starts with Panama and then includes the other provinces on a deferred schedule.  For example, those businesses located in the province of Panamá must have the new cash register equipment in place by 1 October.  Businesses located in the other provinces have a little longer:  Coclé, Colón and Chiriqui on 1 November; then Herrera, Los Santos, Bocas and Veraguas on 1 December.  Darién and the Comarcas have until 1 January.  La Prensa ran a full page ad Mon 29 August with the full schedule on page 49A.

If you have an active business check with your local Panamanian CPA to determine whether you or your company will be required to invest in these printers and comply with the new rules.  Since this was a political decision largely driven by the Minister of Finance and his party, with his pending departure, there is uncertainty about the ultimate implementation and enforcement, but business owners should not bet on the possibility that it will be reversed.