Countries › Panama › Guide › 15. Exiting › Selling shares of a Panamanian company: 10 percent capital gains tax, the 5 percent buyer withholding and the transfer formalities

Selling shares of a Panamanian company: 10 percent capital gains tax, the 5 percent buyer withholding and the transfer formalities

Last verified: 2026-10-29 · Status: Stable

Gains on shares and quotas that are taxable in Panama are taxed at 10 percent; the buyer withholds 5 percent of the full price and remits it within ten days, and the issuer is jointly liable if the buyer does not. The seller can treat the 5 percent as the final tax, or file a special sworn return to recover any excess over 10 percent of the gain as a refund or a non transferable credit. S.A. registered shares pass by entry in the share register, while SRL quota assignments must be registered at the Registro Público and accepted by the other partners.

Panama's currency, the balboa (B/.), is at par with the US dollar, which circulates freely as legal tender; the Superintendencia de Bancos states that the balboa's value is on a par with the US dollar (checked 29 October 2026). USD figures therefore equal the balboa figures.

Key facts

Capital gains tax on Panamanian shares and securities	10 %Código Fiscal art. 701 literal e, as of 2026-10-29 · in force
Buyer withholding on the total price of shares	5 %Código Fiscal art. 701 literal e, as of 2026-10-29 · in force
Days for the buyer to remit the withholding	10 daysCódigo Fiscal art. 701 literal e, as of 2026-10-29 · in force
Exchange rate used for USD conversions	1 PAB per USDBalboa at par with the US dollar (Superintendencia de Bancos), as of 2026-10-29 · in force

The rule

1. Gains from selling shares, quotas and other securities issued by legal persons that are taxable income in Panama, including those from accepting a public tender offer, are subject to capital gains treatment at a fixed 10 percent. The buyer must withhold 5 percent of the total sale value as an advance of the tax and remit it within ten days after the payment obligation arises; if it does not, the issuer of the securities is jointly liable for the unpaid tax. The seller may treat the withholding as the final tax.
Cost to do it: 10 percent of the gain, or 5 percent of the price if the seller accepts the withholding as final.
Example: Shares bought for B/.600,000 and sold for B/.1,000,000: tax B/.40,000; buyer withholds B/.50,000. / US$1,000,000 sale: US$50,000 withheld against US$40,000 of tax.Código Fiscal art. 701 literal e as worded by Ley 18 de 2006 art. 2, art. 701 literal e, 2006-06-19 official text · verified 2026-10-29

2. When the withholding exceeds 10 percent of the gain, the seller may file a special sworn return evidencing the withholding and claim the excess, at its option, as a cash refund or a tax credit for taxes administered by the Dirección General de Ingresos; the credit cannot be assigned to other taxpayers. The gain is not added to the seller's other taxable income.
Example: In the example above, B/.10,000 can be claimed back. / US$10,000 refundable or creditable.Código Fiscal art. 701 literal e fifth paragraph as worded by Ley 28 de 2012 art. 3, art. 701 literal e, 2012-05-08 official text · verified 2026-10-29

3. Registered shares are transferable in the company's books as the pacto social or bylaws provide, but a transfer binds the company only from its entry in the share register. If the holder owes amounts to the company, the company may oppose the transfer until paid, and transferor and transferee are jointly liable for amounts owed on the shares. The pacto social may give the company or shareholders a pre emptive right and impose other restrictions, but an absolute prohibition on transfer is void.
Cost to do it: No registry fee for a share register entry.Ley 32 de 1927, arts. 29 and 32, 1927-02-26 official text · verified 2026-10-29

4. An SRL partner may assign its participation by private document; the pacto social may give the other partners a preference to acquire it. The assignment must be registered at the Registro Público, and the assignee becomes a partner only with the acceptance of the other partners.Ley 4 de 2009, arts. 11 numeral 2 and 26, 2009-01-09 official text · verified 2026-10-29

5. Holders of bearer shares pay dividend tax at 20 percent, so a buyer inheriting bearer share structures inherits that cost.Código Fiscal art. 733 literal i as worded by Ley 8 de 2010 art. 36, art. 733 literal i, 2010-03-15 official text · verified 2026-10-29

Gain as share of price	Tax at 10 percent of gain	Withholding 5 percent of price	Better option
Above 50 percent	More than 5 percent of price	5 percent of price	Accept the withholding as final
Exactly 50 percent	5 percent of price	5 percent of price	Indifferent
Below 50 percent	Less than 5 percent of price	5 percent of price	File the special return and claim the excess

When to accept the 5 percent as final (Código Fiscal art. 701 literal e).

Worked example

A foreign seller sells all shares of a Panamanian S.A. for B/.4,000,000 (US$4,000,000); its cost basis is B/.3,000,000.
The buyer withholds B/.200,000 and remits it within ten days. Tax at 10 percent of the B/.1,000,000 gain is B/.100,000.
The seller files the special sworn return and recovers B/.100,000 as a refund or as a credit usable only by itself.

Step by step

Confirm whether the gain is taxable in Panama and document the cost basis.
Agree in the purchase agreement that the buyer withholds 5 percent and delivers proof of payment.
Record the transfer in the share register (S.A.) or register the assignment and obtain partner consent (SRL).
Update the beneficial owner information held by the resident agent after closing.
Decide whether to accept the withholding as final or claim the excess.

Common traps

The issuer is jointly liable for tax the buyer fails to withhold, so the target itself carries the risk after closing.
The excess credit from share sales cannot be transferred, unlike the real estate credit.
A pre emptive right in the pacto social must be respected or the transfer can be challenged.

Sources

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