Countries › Panama › Guide › 3. Investing › Choosing an investment regime in Panama: general regime, ten year stability, SEM, EMMA, Panama Pacífico or a free zone

Choosing an investment regime in Panama: general regime, ten year stability, SEM, EMMA, Panama Pacífico or a free zone

Argentina. For full detail on Argentina, go to The Argentine Thread.

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

Most foreign investors in Panama operate under the general regime: a territorial 25 percent income tax and 10 percent dividend tax on Panamanian source profits, with free repatriation. Group service hubs look at the SEM licence, group manufacturing and repair operations at EMMA or a free zone, and aviation, logistics, data and shared service operations at Panama Pacífico, while large projects in listed sectors can freeze their tax regime for ten years. This page compares them from the laws and points to the detailed pages.

Panama's currency, the balboa (B/.), is at par with the US dollar, which circulates as legal tender (Ley 84 de 1904; see fx/dollarization-and-the-balboa). USD figures therefore equal the balboa figures.

Key facts

Corporate income tax general rate	25 %Código Fiscal art. 699, as of 2026-10-29 · in force
Dividend tax on Panamanian source profits	10 %Código Fiscal art. 733 literal a, as of 2026-10-29 · in force
Dividend tax for free zone companies (any source)	5 %Ley 32 de 2011 art. 32 numeral 2, as of 2026-10-29 · in force

The rule

1. Companies pay income tax on net taxable income at the general rate of 25 percent from fiscal year 2011.Código Fiscal art. 699 as worded by Ley 8 de 15 de marzo de 2010 art. 9, art. 699, 2010-03-15 official text · verified 2026-10-29

2. Companies that need an Aviso de Operación, operate in the Colón Free Zone, an oil free zone, other free zones or a special economic area, or earn taxable income in Panama withhold dividend tax at 10 percent on Panamanian source profits and 5 percent on exempt income under art. 708 literals f and l, foreign source and export income.Código Fiscal art. 733 literal a as worded by Ley 8 de 2016 art. 63, art. 733 literal a, 2016-04-06 official text · verified 2026-10-29

3. SEM licensees pay 5 percent income tax on net taxable income from services to their group and no dividend tax; EMMA licensees pay the same 5 percent on manufacturing related services and also import inputs and equipment duty free.Ley 41 de 2007 arts. 21 and 21-B as worded and added by Ley 57 de 2018; Ley 159 de 2020 arts. 20, 22 and 29, Ley 41 arts. 21 and 21-B; Ley 159 arts. 20, 22 and 29, 2020-08-31 official text · verified 2026-10-29

4. Free zone companies under Ley 32 de 2011 are exempt from national direct and indirect taxes on their operations and inputs; service, logistics, high technology, research, higher education, health and environmental services companies are exempt from income tax on exterior operations and operations among themselves, but local operations into Panama are taxed. They pay dividend tax at 5 percent whatever the source, or 2 percent complementary tax if no profits are distributed.Ley 32 de 5 de abril de 2011, arts. 31, 32 and 33, 2011-04-05 official text · verified 2026-10-29

5. Panama Pacífico companies are free of import duties, ITBMS, stamp and licence taxes; listed activities (aviation services, high technology manufacturing, call centre and data services, trade and logistics) are exempt from income tax, office administration services pay 5 percent, and other income pays the general rate.Ley 41 de 2004 arts. 58 and 60 as worded by Ley 66 de 2018 arts. 2 and 3, arts. 58 and 60, 2018-12-13 official text · verified 2026-10-29

6. Any investor in a listed sector with a plan of at least B/.2,000,000 can register for ten years of legal, national tax, municipal, customs and labor stability; SEM and EMMA licensees get the same guarantees automatically.Ley 54 de 1998 arts. 5, 10 and 16; Ley 41 de 2007 art. 15-A; Ley 159 de 2020 art. 55, Ley 54 arts. 5, 10 and 16, 1998-07-22 official text · verified 2026-10-29

Regime	Fits	Income tax	Dividend tax	Entry test	Substance test
General regime	Any business selling in Panama	25 percent on Panamanian source income	10 percent (5 percent on foreign source or export profits)	None	No
Ley 54 stability	Projects in listed sectors	Rate in force at registration, frozen 10 years	As frozen	Plan of at least B/.2,000,000	Execution of the plan
SEM	Group headquarters and shared services	5 percent (2 percent floor with credits)	Exempt	US$200 million group assets or more than 40 countries	Yes, yearly
EMMA	Group manufacturing, assembly, repair, testing, logistics	5 percent (2 percent floor with credits)	Exempt	Set by the licensing Commission	Yes, yearly
Panama Pacífico	Aviation, high technology, data, logistics, shared services	Exempt for listed activities; 5 percent for office services; else general	General rules, with special rules for trade and logistics	Registration with the Agency	Yes for data, logistics and office services
Free zone (Ley 32 de 2011)	Export manufacturing and services	Exempt on exterior operations for listed company types	5 percent	Licence in a licensed free zone	Not in Ley 32

Main regimes compared, from the laws cited on this page and the linked pages.

Worked example

A Chilean group plans three things in Panama: a regional finance and HR hub, a spare parts repair workshop for its subsidiaries and a sales office for Panamanian customers.
The hub fits an SEM licence (5 percent on its cost based income, no dividend tax), if the group meets the asset or country test.
The workshop fits EMMA (5 percent, duty free equipment) or a free zone; at B/.500,000 (US$500,000) of net income, 5 percent means B/.25,000 of tax against B/.125,000 at 25 percent.
The sales office stays in the general regime: 25 percent on its profits and 10 percent dividend tax on distributions, with free repatriation.

Step by step

List each activity and who the customers are: group companies, foreign clients or Panamanian buyers.
Match group only services to SEM or EMMA, export operations to a free zone or Panama Pacífico, and domestic sales to the general regime.
Check entry tests (group size, investment amount, registration) and the yearly substance rules.
Check the constitutional limits, especially the retail trade reservation, before setting up a domestic sales channel.
Model the tax: income tax, dividend tax, withholding on payments abroad and any capital tax.
Use separate companies where activities fall under different regimes; SEM and EMMA require it for activities outside the licence.

Common traps

Incentive regimes cover exports and group services; sales into Panama are taxed under general rules almost everywhere.
SEM, EMMA and Panama Pacífico benefits are lost year by year if staff and spending in Panama are not adequate.
An EMMA located in a free zone or Panama Pacífico gets only the EMMA tax regime.
Panama has no tax treaty with Argentina, so Argentine owners face domestic withholding rates on payments from any of these regimes.

Sources

← Selling to the Panamanian State: procedures, thresholds, bonds and bid challenges under the public procurement law (Ley 22 de 2006)Choosing a legal entity in Panama: sociedad anónima, limited liability company, branch, private interest foundation or sociedad de emprendimiento →

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