DGI Continues Crackdown On Unregistered Rentals

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The Dirección General de Ingresos (DGI) continues to try formally regulate short-term vacation rentals made online with sites such as Airbnb and VRBO, with a focus on the uncollected tax revenue from these unregistered and largely untraceable transactions. So far, the only measure taken by the government has been the imposition and collection of fines of up to US$50,000 and a promise to accelerate the process of imposing these sanctions.

The government’s objection to these online services, according to capital.com.pa, is not limited to the fact that required permits are being ignored, but that, by using these electronic platforms, private individuals are receiving income that is not being declared—and, therefore, isn’t being taxed. Publio Cortes, head of the DGI, also noted that, “if you provide a service within the territory of Panama, you will also be the subject of Transfer Tax on Personal Property and Services.”

Cortes stated emphatically, “The law will be applied firmly by the DGI, regardless of how payments are made by the parties involved in the business transaction.”

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