Panama digital economy taxation proposal

The Panamanian government has proposed Bill 30-26 to update the national Fiscal Code, aiming to expand the Sales and Services Tax (ITBMS) to include the digital economy. The initiative targets transactions made through international e-commerce sites, mobile applications, and short-term vacation rentals like Airbnb.

Minister of Economy and Finance Felipe Chapman stated the measure is intended to “level the playing field” between local businesses and foreign digital platforms, noting that many items currently purchased through international sites escape taxation. The government estimates the reform could generate over $100 million annually by utilizing technical criteria, such as IP addresses and billing locations, to determine if a service is consumed within Panama.

The proposal has moved to the Economy and Finance Commission of the National Assembly for debate. While officials argue the update is necessary to strengthen public service funding and ensure equitable treatment, critics and opposition lawmakers have expressed concern. Opponents suggest the measure could act as a “blow to the pockets of the middle class” and increase costs for digital subscriptions and internet purchases. In its deliberations, Panama is considering regional models, such as the tax on cross-border digital services implemented by Costa Rica in 2020.

Legislative progress continues as the National Assembly debates Bill 30-26, which specifically proposes a 7% tax on digital services and international e-commerce platforms, including streaming services and productivity tools. This measure is part of a broader legislative push for tax reform and economic stimulation.