Panama proposes tax reforms to stimulate construction and housing

The Panamanian government has submitted a bill to the National Assembly to reform the Real Estate Transfer Tax (ITBI) to stimulate the construction sector, investment, and formal employment. Presented by Minister of Economy and Finance Felipe Chapman, the proposal seeks to facilitate access to primary residences by offering a partial tax exemption on the first sale of certain new homes.

The proposed scheme includes an exemption on the first 120,000 balboas of the tax base for qualifying new housing sales. For properties with a tax base between 120,000 and 200,000 balboas, a preferential tax scale would apply to the amount exceeding the exempt limit. For properties exceeding 200,000 balboas, the initial 120,000 remains exempt, while the remainder is subject to the general tax regime.

The Panamanian Chamber of Construction (CAPAC) has expressed support for the initiative, noting that it stems from a National Technical Table designed to address industry barriers. The legislative effort aims to reduce bureaucracy, encourage public and private investment, and improve labor conditions within the sector.