Brief: Finance

audit uncovers millions in unpaid sales taxes

David Mesa/LA PRENSA

red-handed: The Dirección General de Ingresos said the service industry accounts for most of the unpaid ITBMS taxes.1039924

The Dirección General de Ingresos (DGI) has launched a massive audit in an effort to put an end to the rampant evasion of a sales tax applied to goods transfers, furniture and services –the ITBMS tax- which accounts for one-fifth of the government’s total tax income.

“The service industry general fails to pay the ITBMS,” said DGI directo Pedro Prados. “One of the principal irregularities occurs among retention agents [shops and businesses, for example] who charge the customer, but don’t report the tax to authorities.”

Although the number of companies failing to pay the ITBMS and the total loss in revenues are not known exactly, the current audit has succeeded in recouping $5.7 million in unpaid taxes so far this year.

In the first quarter of 2008, $82.9 million poured into state coffers from the ITBMS, an increase of 22 percent over 2007. Encouraged by the results, the DGI said it will add 40 more officers to its auditing team.

Economist Frank Lima believes that Panama could benefit from more effective technology in the collecting of the ITBMS, such as the “tax register” which is used in Argentina. “It's a device placed next to a business’ cash registers, and it reports all sales to the authorities immediately, preventing fraud.”