Panama – Extended Deadlines for Tax Treaty Benefit Claims Eliminated

WHY THIS MATTERS

The revision of the extension policy has a direct impact on all taxpayers and organizations seeking benefits under Panama’s double tax conventions.  With a significantly shortened extension available to taxpayers for purposes of claiming benefits under a treaty, the importance of claiming benefits in a timely fashion with submissions of accurate and timely documentation has increased.  Failure to meet the stricter deadlines for correcting errors or submitting missing information may result in denial of treaty benefits.

Global mobility programs and their tax service providers that rely on treaty relief may wish to update their policies and procedures to comply with the new standards.

The new extension policy is already in effect, meaning any current or future applications for treaty benefits must comply with the stricter deadlines. 

KPMG INSIGHTS

The DGI’s move to tighten extension policies reflects a broader trend towards stricter compliance enforcement and administrative efficiency.  Taxpayers must now approach treaty benefit claims with greater diligence, as the opportunity to correct errors post-submission is substantially curtailed.

Actions to Consider

• Taxpayers may wish to implement thorough pre-submission checks to foster the submission of complete and accurate documentation at the outset.
• Internal training and process adjustments may be necessary for taxpayers and/or tax service providers so that they are better able to meet the new, shorter deadlines.
• Early engagement with professional advisers and the DGI is advisable, especially in complex cases or where documentation may be challenging to obtain and/or there are questions about the necessary documentation.

What’s Next?

Claiming treaty benefits and the timely submission of documents for purposes of claims can be challenging, especially now in light of the shortened extensions available.  If taxpayers, global mobility program managers charged with the tax compliance affairs of their mobile employees, or tax service providers have any questions or require assistance, they should consult with their usual qualified tax professional or a member of the tax team with KPMG in Panama.