Can I Claim ITBMS Paid on Purchases as a Business Expense in Panama?
Partially. ITBMS paid on purchases used to generate exports can be refunded. For other purchases, the treatment depends on the invoice and the return, so confirm it before relying on it.
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What Dirección General de Ingresos (DGI), Ministry of Economy and Finance (MEF) says
Finn's Panama rules state that exports are zero-rated and that ITBMS paid on inputs used to generate exports can be refunded. The rules do not set out how input ITBMS is treated on other purchases, so confirm the position with the DGI or a contador público autorizado. Each monthly Formulario 430 can be corrected only once.
When you can claim
- ITBMS on inputs used to generate exports, refundable
- ITBMS on valid supplier invoices addressed to the company
- ITBMS reported accurately on the monthly Formulario 430
- Records of each invoice supporting the return
When you cannot claim
- ITBMS on invoices without the company RUC
- ITBMS on purchases for private use
- ITBMS on exempt supplies (basic foodstuffs, medicines, school supplies and education, agricultural products)
- Amounts you have already corrected once for the same period
Good to know
Pro tip: Reconcile sales and purchase ITBMS by the 10th of each month. That leaves time to fix errors before the 15th.
Important: A period can be corrected only once, so reconcile ITBMS before filing each month.
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