On April 28, Panama’s legislature unanimously passed a bill that imposes zero capital gains tax on cryptocurrencies to make the country a favorite destination for investors and businesses.
Panama Crypto Bill a Step in the Right Direction
Panama is a known tax haven with laws encouraging financial privacy protection while being a jurisdiction with one of the globe’s lowest tax regimes. The new crypto law sponsored by Gabriel Silva, a Panamian policymaker in the National Assembly, will be another step in the right direction for the Central American country by aptly guiding the use and commercialization of crypto assets.
Unlike the approach taken earlier by El Salvador, which legalized Bitcoin in September 2021, making the proof-of-work private cryptocurrency legal tender, Panama’s regulation will be broader. For instance, the country’s policymakers know that cryptocurrencies are cross-cutting and rapidly evolving, including creations like NFTs.
Accordingly, the crypto law would be comprehensive, providing crucial guidance on trading, the issuance of digital assets, tokenization of commodities—most notably, precious metals like gold, and the development of crypto-powered payment systems.
Pay Taxes using Cryptocurrencies
Following the bill’s approval by the country’s legislature, it now becomes extremely easier for people and businesses to use leading digital assets like Bitcoin and XRP while adhering to existing binding laws.
A significant development with the new law is that businesses would be free to set up shop in the country and settle their tax obligations using their choice of cryptocurrencies. Although there was no express mention that Panama had made cryptocurrencies legal tender, holders can use them to pay all legal civil and commercial operations within its borders.
Analysts observe that cryptocurrencies will promote financial inclusion in the country. Even though Panama is a known tax haven, only 25 percent of its population has a banking account. It is despite the high internet penetration. Since cryptocurrencies have been approved, more people are expected to access financial services enabled by the underlying blockchain network. At the same time, observers note that the new regulation would make resisting banks more cooperative. However, it may take years for leading banks to toe the line, accepting digital assets.