Review and improvement of CAIR

September 17, 2021

The CCIAP (Cámara de Comercio Industrias y Agricultura de Panamá – Chamber of Commerce, Industries, and Agriculture of Panama) and the DGI (Dirección General de Ingresos – General Directorate of Revenues) met to review and improve the processes of the CAIR (Cálculo Alterno al Impuesto sobre la Renta – Alternative Income Tax Calculation).

The CAIR is an alternative to the traditional method of taxation and occurs when companies with a net taxable income over $1.5 have a different regime. When this occurs, taxpayers must pay a rate exceeding the following resulting amounts:

  • 25% of net taxable income, or
  • 4.67% of the total taxable income.

Now, according to the Panamá América, both organizations are analyzing alternatives to improve the competitiveness processes that will benefit tax collections. Thus, DGI Director-General Publio De Gracia opposed stating, this is not the right time to eliminate the CAIR.

He also emphasized that the institution has more important actions to develop in favor of modernization and technification that will allow them to be more efficient, therefore, the CCIAP and the DGI agreed this alternative mechanism for the payment of income tax has been beneficial for all.

Finally, both organizations agree that so far the CAIR provides an alternative to the traditional method of taxation, so the search for other methods of collection should be carefully evaluated and not through the elimination of this mechanism that gives security to both the businessman and the tax administration to collect the taxes that the State needs to carry out the works that the Panamanian people require.

You can follow the following web link to see the complete note:

Source: Panamá América 08/09/21