Lady Luck has finally looked upon all those who were rooting that Panama authorities eliminate the tax on gambling. But all things considered, it is more than pure chance that affected the decision of Panama’s Gaming Control Board – Junta de Control de Juegos (JCJ).
The controversial 5.5% tax on gambling activities has been introduced in 2015, intending to support the senior citizens in Panama and pay for their retirement benefits. The tax has been unpopular from the start regardless of its intentions, and now, almost five years later, the government is finally thinking about other ways to fill the budget.
Decreasing revenues from the tax have started to worry the officials, as more and more potential tourists have turned to online betting. Namely, the numbers are showing that the gambling industry (including sports betting, bingo, slot machines, and casinos) has a direct effect on another important Panama industry – tourism.
Hotel occupancy was continuously dropping and, consequently, thousands of people employed in the industry have lost their jobs, leading to a record unemployment rate of 7.07% in 2019. Government officials have decided to stop the domino effect by abolishing the tax and gradually get the economy back on track.
Luckily, gambling is not the only reason Panama attracts visitors, even though it has proven to be an influential factor. Panama is renowned for its famous canal, astonishing biodiversity, Pacific and Caribbean coastlines, coffee farms, UNESCO Old Town “Casco Viejo”, cultural diversity, and so much more.
It shouldn’t surprise at all that people from busy areas in North America are leaving the city for beach life and the more fulfilled and healthier lifestyle Panama can offer. The Ministry of Economy and Finance certainly hopes that these natural and cultural attractions will manage to keep the foreign visitors (and their dollars) who are originally attracted by the new gambling regulations.
The absence of tax on all winnings and player stakes now asks for a special level of revenue control. To be as certain as possible that the operators are reporting their revenues correctly, the JCJ plans to introduce additional measures. Specifically, they are about to increase the number of auditors and incorporate an interconnected digital system that will make their job easier.
These measures combined are supposed to attract international visitors and boost the economy, revenues coming partly from the gambling industry and partly from tourism. However, Panama tourism contributes to the economy in one other way. Of those who visit once, many are relocating from the States to Panama later, to one of their new Panama City homes.
It further means that expected improvements in the tourism sector will lead to foreign investments, not only in the tourist capacities and amenities but also in Panama real estate.
There is a regular influx of new construction even though the existing properties are still on the market. This period is ideal for those planning to purchase Panama condos. However, this increased supply in Panama real estate for sale is expected to balance out soon, with the return of tourists.
But there’s more to do in Panama City than gamble and sip cocktails on one of the beaches. Panama’s coastal waters are popular in sport-fishing circles and it is as easy to get hooked on Panama fishing as it is on investing in Panama rental property. The real estate market in Panama is currently a buyer’s market and it’s going to stay like that for a while, inviting investments in buy-to-let real estate.
It has been a trend with foreign visitors (mostly Canadians and Europeans but Americans as well) to purchase property in Panama after vacationing. They are mostly interested in beachfront condos and ocean-view property, mostly in Panama City. However, they would need to compete with local investors who see this increased supply in real estate as an opportunity to improve their financial standing.
Buy-to-let properties are expected to create income for locals riding the wave of new tourists. So, before you pack your belongings, inform yourself of the unwritten rules when moving abroad, and get informed in detail about your new Panama property. Visiting Panama or even buying a property and moving there seems to be a safe bet. Unlike the gambling tax, a buyer will have to pay property tax, which is fair, at least for the U.S. standards.
Moreover, Panama is perceived as a stable economy compared to its southern neighbors. The Panama Papers scandal from 2016 has settled enough to permit the Panama real estate market to recover over the recent years. However, the market is still in certain disarray that has nothing to do with Panamá Papers. This specific confusion relates to the difference in which housing markets function in the U.S. and Europe compared to Panama. Certain indicators, like the time a property sits on the market, are not measured, nor there is a centralized database where both buyers and sellers can find valuable information.
It further leads to the noticeably unrealistic listing prices and otherwise excellent Panama homes sitting in the market for too long. Or never reaching the prospective local or foreign buyers. Steps have been taken to bring order into this area and, thus, assist buyers and sellers and real estate agencies alike. Those improvements will take some time, though, before they actualize.
Also, putting the right price on Panama property is made difficult by variations in quality, layout, location, and equipment of the said property. On a more positive note, new construction quality is rising with savvy builders focusing on the aspects that attract picky buyers. These include smart home features, modern home layouts, and high-quality construction and materials.
If we look outside of the context, it may be difficult to see the connection between (the elimination of) tax on gambling activities and Panama real estate. However, tourism is the link that joins these industries and heavily impacts the lives of Panamanians. It seems that the recent decision concerning the tax on gambling goes in favor of the 4.3 million citizens and the country’s long-term economic growth.