Panama to Scrap Gambling Tax to Attract Tourists

Panama has announced sweeping new changes to the taxation of betting in the country, with the abolition of the unpopular 5.5% Income Tax. Under the new rules, players will be able to receive their winnings tax-free whether they choose to take it as chips or cash.

The move is a desperate attempt to prop up the diminishing tourism industry in Panama and there are hopes that lucrative rules around betting will lure more visitors to the country.

Junta de Control de Juegos (JCJ), the body responsible for gambling regulation in Panama, announced that it would be introducing changes relating to the taxation of betting. The 5.5% tax which currently applies to gambling winnings is being scrapped by the Ministry of Economy and Finance.

The tax was originally introduced in 2015 with the aim of raising revenue to pay for retirement benefits for citizens. However, this levy was a policy of the previous government and the current incumbents believe that it is proving detrimental to the tourist trade.

The secretary of the JCJ confirmed that the income tax would be abolished right across the board on all aspects of gambling in Panama. This includes casino tables, slots, bingo and sports betting and is designed to encourage more tourists the visit the country.

Getting rid of tax on gambling winnings has proved to be a popular policy with a number of agencies. The head of the tourist body Autoridad de Turismo de Panama has backed the plan. The tourist industry has slumped with the loss of approximately 40,000 jobs and hotel occupation rates plunging to below 45% in the last two years.

The gambling body in Panama, Asociación de Administradores de Juegos de Azar, has been campaigning for the tax to be scrapped since it was first introduced four years ago. They believe that the taxes has played a part in persuading local players and international gamblers to visit neighbouring countries instead.

At the same time as getting rid of the tax for players, the Panama government is preparing to introduce a new audit system for operators. Using an “interconnected electronic system” the government will be ensuring that operators are paying the right amount of tax, and will also be stepping up their monitoring activity to identify taxable revenue.

Inside sources have suggested that many of the changes announced have been implemented as a result of a recent meeting between the head of the JCJ and his Mexican equivalent, Luis Calvo Reyes, who leads Mexico’s gambling regulatory body.