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Panama Will NOT Be Taxing Expat Retiree Income

Immigration IssuesWell, that settles that. Finally, the government has come out with a strong and precise statement regarding the implementation of some fuzzy language that had the English speaking expatriate community worried that the Panamanian government might start taxing foreign income. http://www.mef.gob.pa/comunicados/2005-comunicados-ingles-National%20and%20foreign-07-4-2005.asp

Government of Panama AnNational and foreign retiree pensions continue to be income tax free

Since the enactment of Public Law 6 of 2005 (Whereby a Fiscal Equity is Implemented) there have been some publications, specially on the internet, that in a vicious and distorted way have been spreading misinformation regarding the effects of Law 6. This information could affect negatively our national economy and the legal security enviorment for foreign investors in the Republic of Panama. Hence, the Economy and Finance Ministry clarifies the subject as follows:

FIRST: The pensions and/or retirement benefits that foreign residents of Panama receive from abroad, DO NOT PAY Income Tax in our country, neither are obliged to declare such income.

SECOND: Law 9 of 1987, "Whereby exemptions are granted to Retirees, Pensioners and persons retired from active live", is still in force.

THIRD: The interests generated by savings accounts (i.e. Time
Deposits, Regular Savings Accounts) DO NOT PAY Income Tax in Panama.

FOURTH: The Republic of Panama only taxes income that is generated within the territory of the Republic of Panama. Therefore, foreign source income is not taxable in Panama.

We invite those who have inquiries regarding the effects of Law 6 of 2005, to contact with the General Department of Revenue of the Economy and Finance Ministry (507) 207-7753; Fax (507) 227-3852, Email: dgireclamos@mef.gob.pa, Website: www.dgi.gob.pa
April 7, 2005
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