Reputational Risk of Tax Evasion: Panama Releases List of Tax Debtors

Ivelisse Bonilla, lawyer in ARIAS Panama and expert in Tax matters, shares this article on tax evasion and the measures adopted by Panamanian authorities.  

Tax evasion is a controversial issue that has gained increasing prominence worldwide in recent years. Many high-profile cases have emerged involving not only large companies but also well-known individuals, such as prominent singers, athletes, and entrepreneurs. This has had a profound impact, not only due to the economic sanctions faced but also because it affects their image. Many overlook that image is one of the most valuable assets a businessperson can have, and it can be compromised by failing to meet public tax obligations. 

Panamanian legislation has evolved significantly in recent years to combat tax evasion. Several recommendations from international organizations such as the Organization for Economic Co-operation and Development (OECD) and Financial Action Task Force (FATF) have been adopted by the country. As a result, Panama has signed important agreements on fiscal transparency and the prevention of tax evasion globally and has implemented internal measures, as this issue also affects its public finances, with no country being immune. In this regard, several strategies have been incorporated into its legislation, including suspension of corporate rights, restrictions on the use of the tax authority’s IT system for both individuals and companies, adoption of electronic invoicing for better control and monitoring of taxpayers, increased penalties, creation of digital channels for receiving complaints, and publication of lists of delinquents, among others. 

This leads us to the first list of tax debtors made public through Resolution 201-4328 of June 25, 2024, published in Official Gazette 3,0062-A on June 27, 2024. This list reveals: i) the full name of the taxpayer, whether an individual or legal entity, national or foreign; ii) the Unique Taxpayer Registration number, and for individuals, their ID number in Panama; iii) the type of tax, and iv) the amount of the delinquency for those with arrears exceeding 12 months regarding income tax, tax on the transfer of movable goods and services - ITBMS (Panamanian tax similar to VAT), complementary tax (considered an advance on dividend tax), and educational insurance. 

Appearing on a public list of tax debtors not only brings legal and financial penalties but can also severely damage one’s reputation. Remember that the success of any business model, whether executed by an individual or a corporate entity, relies on the trust it builds with clients, investors, and business partners. Negative exposure due to tax evasion can erode this trust irreversibly and significantly impact business performance by affecting relationships with clients who may not prefer the offered goods or services, strategic partners who may be discouraged from investing, renewing agreements, or forming new alliances, and financial institutions that might reconsider extending credit or raise interest rates due to perceived higher risk, among others. 

In the digital age, information spreads rapidly. Therefore, the Panamanian tax authority, also known as the General Directorate of Revenues, has leveraged technology to implement strategies that exert greater social and legal pressure on taxpayers. The list of debtors is made available through the Official Gazette website, as well as on the tax authority’s website and in national newspapers. Digital media have quick dissemination in the fast-paced world of the internet, meaning that news such as appearing on a tax authority’s debtors list can quickly circulate worldwide, negatively affecting an individual or business. 

For companies in Panama, the lesson is clear: tax compliance should be seen not just as a cost but as an investment in the sustainability and reputation of the business. In this context, companies have the option to adopt measures for the responsible and timely execution of their tax obligations, which will in turn provide a competitive advantage and, in many cases, a differentiating factor with significant benefits, as it can improve relationships with stakeholders, build trust, and strengthen corporate reputation, enhance corporate prestige, which is a highly valuable asset and a key factor among competitors. 

1. "La lista negra de Hacienda incluye a 6.084 morosos con una deuda de 15.237 millones”, El País, June 28, 2024. https://elpais.com/economia/2024-06-28/la-lista-negra-de-hacienda-incluye-a-6084-morosos-con-una-deuda-de-15237-millones.html 

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