Sales tax dodgers cost $500 million annually

RETAILERS restaurants and other businesses strip Panama of over $500 million annually by evading the Itbm (sales)tax says the Directorate General of Taxation (DGI).

Last year, the tax raised $762 million, a figure DGI officials said should be well over $1 billion, but on Monday Feb.1 a new system kicked in to help reduce the theft from the public purse.

DGI Director Publius Cortes said that the  changes will increase revenues by at least $100 million a year.

He  said  the changes will not impact consumers, but rather banks and merchants.

The first change is that stores with sales greater than $10 million annually will have to pay half the tax when they make purchases from suppliers, and the other half when the goods are sold.

That is expected to make it harder for large retailers to avoid paying the tax.

The second change is mandating that 2 percent of credit card transactions will be withheld by banks for the payment of the tax.