A tax litigation is a conflict between a taxpayer and the tax administration, in this case, the Directorate General of Revenue (DGI) of Panama. This type of dispute can arise for various reasons, such as discrepancies in the determination of taxes, imposition of fines and penalties, differences in the interpretation of deductions and exemptions, valuations of assets, and problems related to tax refunds and returns. In Panama, such litigation is a frequent reality for both companies and individual taxpayers. The objective of tax litigation is to resolve these disputes in a fair manner, ensuring compliance with the tax laws and protecting the taxpayer's rights.
Below, we detail some of the most common tax litigation cases in Panama and provide strategies to resolve them effectively.
Problem: Differences in income tax returns can lead to disputes with the Directorate General of Revenue (DGI). These discrepancies often arise when the DGI and the taxpayer disagree on the amount of taxes owed.
Resolution: It is crucial to keep detailed financial records and document all transactions. In case of audit, present solid documentary evidence and, if necessary, hire an experienced tax advisor to defend your position.
Problem: Penalties may be imposed for failure to comply with tax obligations, such as filing late or underpaying taxes.
Resolution: If a penalty is received, it is critical to review the notice thoroughly. Filing a formal appeal with evidence of compliance or justified reasons for non-compliance may result in the reduction or elimination of the penalty.
Problem: Disputes arise when there are different interpretations of what expenses are deductible or what income is exempt from tax.
Resolution: Present well-supported legal and accounting arguments. Consult tax experts to prepare a robust defense that demonstrates eligibility for claimed deductions or exemptions.
Issue: Conflicts can arise over the valuation of property and other assets, which affects the tax base.
Resolution: Obtaining an independent appraisal and presenting this evidence during the appeal process can help resolve the dispute fairly.
Problem: Difficulties in obtaining tax refunds can lead to litigation.
Resolution: Strictly follow the administrative process for claiming refunds, making sure to submit all required documentation. In case of unwarranted delays, consider legal action to enforce the refund.
Engage Specialized Counsel: Having attorneys and tax advisors with experience in tax litigation can make a difference.
Thorough Documentation: Maintain detailed and organized records of all financial transactions and communications with the DGI.
Proactive Communication: Establish clear and constant communication with tax authorities to resolve disputes before they escalate.
Use of Alternative Means: Consider mediation and arbitration as alternatives to tax courts to resolve disputes more efficiently and less expensively.
Tax disputes can be complex and stressful, but with proper preparation and expert support, it is possible to resolve them favorably. At JVD Consultores, we are committed to providing expert advice and representation to protect our clients' rights and interests at all stages of the tax process.
For more information and personalized advice, please do not hesitate to contact us. Our experience in tax litigation allows us to offer effective and efficient solutions to any tax dispute you may face.
