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Start here: the legal gateways every foreign investor crosses in Panama

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

Panama gives foreign investors the same rights as nationals and guarantees free repatriation of capital, dividends, interest and profits, in an economy where the balboa is at par with the US dollar and the Constitution bars forced circulation paper money. Most investors operate through a sociedad anónima formed by two people of any nationality with three directors, registered at the Registro Público, recorded in the beneficial ownership registry by a resident agent and announced to the State through an Aviso de Operación before trading. Income tax is territorial with a 25 percent corporate rate, dividends bear 10 percent (5 percent from foreign source or exempt profits), the ITBMS is 7 percent, employers pay 13.25 percent to the Caja de Seguro Social until February 2027, and foreign passive income of group entities without substance is taxed at 15 percent from fiscal year 2027.

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

Key facts

Corporate income tax rate	25 %Código Fiscal art. 699 (Ley 8 de 2010), as of 2026-10-29 · in force
Dividend tax on Panamanian source profits	10 %Código Fiscal art. 733 (Ley 8 de 2016), as of 2026-10-29 · in force
ITBMS standard rate	7 %Código Fiscal art. 1057-V (Ley 8 de 2010), as of 2026-10-29 · in force
ITBMS taxpayer threshold (annual gross income)	36000 PABCódigo Fiscal art. 1057-V parágrafo 9, as of 2026-10-29 · in force
Tasa única anual for companies	300 PABCódigo Fiscal art. 318-A (Ley 52 de 2016), as of 2026-10-29 · in force
Minimum founders of a sociedad anónima	2 personsLey 32 de 1927 art. 1, as of 2026-10-29 · in force
Minimum directors of a sociedad anónima	3 personsLey 32 de 1927 art. 49, as of 2026-10-29 · in force
Deadline for the resident agent to record beneficial owners	15 business daysLey 129 de 2020 art. 11 (Ley 254 de 2021), as of 2026-10-29 · in force
Employer Caja de Seguro Social contribution until 28 Feb 2027	13.25 %Ley 51 de 2005 art. 101 (Ley 462 de 2025), as of 2026-10-29 · in force
Employee Caja de Seguro Social contribution	9.75 %Ley 51 de 2005 art. 101 (Ley 462 de 2025), as of 2026-10-29 · in force
Rate on foreign passive income of non qualifying group entities (from FY 2027)	15 %Ley 526 de 2026, as of 2026-10-29 · pending
Double taxation treaties listed by the DGI	17 treatiesDGI Listado de Convenios, as of 2026-10-29 · in force
Repatriation of dividends and capital	Free by law, no registration or authorization textLey 54 de 1998 art. 2, as of 2026-10-29 · in force
Balboa per US dollar	1 PAB per USDSuperintendencia de Bancos, as of 2026-10-29 · in force

The rule

1. Foreign investors and the companies in which they participate have the same rights and obligations as national investors and companies, limited only by the Constitution and the law, including freedom of trade, industry, export and import. They are guaranteed free disposal of the resources generated by the investment, free repatriation of capital, dividends, interest and profits, and free sale of their production.
Example: A Panamanian subsidiary that paid its taxes may send B/.250,000 of profits to its foreign parent without any exchange authorization. / B/.250,000 is US$250,000; no currency conversion is needed because the US dollar is legal tender.Ley 54 de 22 de julio de 1998, por la cual se adoptan medidas para la estabilidad jurídica de las inversiones, art. 2, 1998-07-22 official text · verified 2026-10-29

2. There is no forced circulation paper money in Panama. The Superintendencia de Bancos describes the balboa as the official currency, with a value on a par with the US dollar, so prices, contracts, salaries and taxes are in practice expressed and paid in US dollars.
Example: A B/.10,000 invoice is settled with US$10,000 by bank transfer. / US$10,000.Constitución Política de la República de Panamá (texto único 2004), art. 262, 2004-11-15 official text · verified 2026-10-29

3. Two or more persons of legal age, of any nationality and even if not domiciled in Panama, may form a sociedad anónima for any lawful purpose (art. 1). The pacto social may be signed anywhere and in any language (art. 3); if signed abroad it must be authenticated by a Panamanian consul before being protocolized at a Panamanian notary, with an official translation if not in Spanish (art. 5), and it binds third parties only once registered (art. 6). The company is managed by a board of at least three directors of legal age (art. 49).Ley 32 de 26 de febrero de 1927, sobre sociedades anónimas, arts. 1, 3, 5, 6 and 49, 1927-02-26 official text · verified 2026-10-29

4. Every sociedad anónima, limited liability company and other legal entity, national or foreign, pays a tasa única anual of B/.300 at registration and every following year to keep full validity; private interest foundations pay B/.350 at registration and B/.400 a year. From the second year it is due by 15 July for entities registered from January to June and by 15 January for those registered from July to December, through the legal representative or resident agent.
Cost to do it: B/.300 (US$300) a year per company; B/.400 (US$400) a year per private interest foundation.
Example: A company registered on 10 March 2026 paid B/.300 at registration and pays its next B/.300 by 15 July 2027. / US$300 at registration and US$300 by 15 July 2027.Código Fiscal art. 318-A as worded by Ley 52 de 2016 art. 9, art. 318-A, 2016-10-28 official text · verified 2026-10-29

5. The resident agent must record the entity and its beneficial owners in the single beneficial ownership system within 15 business days of the entity's formation or registration, or of the appointment of a new agent at the Registro Público; the entity must report changes in its beneficial owners to the agent within 15 business days, and the agent updates the system within five business days.Ley 129 de 2020 arts. 11 and 12 as worded by Ley 254 de 2021 arts. 34 and 35, Ley 129 arts. 11 and 12, 2021-11-11 official text · verified 2026-10-29

6. The Aviso de Operación is a mandatory sworn declaration without which commercial or industrial activities cannot be carried on in Panama; once filed and confirmed in the PANAMAEMPRENDE system of the Ministerio de Comercio e Industrias it becomes a public document with full legal validity.Ley 5 de 2007 art. 3 as worded by Ley 2 de 2013 art. 2, Ley 5 de 2007 art. 3, 2013-02-06 official text · verified 2026-10-29

7. The annual tax on the Aviso de Operación is 2 percent of the company's capital, with a minimum of B/.100 and a maximum of B/.60,000; individuals and companies with invested capital below B/.10,000 are exempt. Businesses in the Colón Free Zone, free zones and special economic areas need no Aviso but pay 0.5 percent of capital a year, minimum B/.100 and maximum B/.50,000.
Cost to do it: 2 percent of capital, B/.100 (US$100) minimum, B/.60,000 (US$60,000) maximum per year.
Example: Capital of B/.50,000 gives an annual Aviso tax of B/.1,000. / US$1,000 on US$50,000 of capital.Código Fiscal art. 1004 as worded by Ley 412 de 2023 art. 19, art. 1004, 2023-11-21 official text · verified 2026-10-29

8. Income tax reaches income produced within the territory of Panama; parágrafo 1 of art. 694 lists what counts as Panamanian source. Legal persons pay a general rate of 25 percent from fiscal year 2011 (art. 699), and those with taxable revenue above B/.1,500,000 pay on the higher of ordinary net taxable income or 4.67 percent of total taxable revenue.
Example: Net taxable income of B/.400,000 bears B/.100,000 of income tax. / US$100,000 on US$400,000.Código Fiscal art. 694 parágrafo 1 and art. 699 as worded by Ley 8 de 2010 arts. 2 and 9, arts. 694 and 699, 2010-03-15 official text · verified 2026-10-29

9. Companies that need an Aviso de Operación, or otherwise earn taxable income in Panama, withhold dividend tax of 10 percent on Panamanian source profits they distribute and 5 percent on distributions of certain exempt income, foreign source income or export income.
Example: After paying B/.100,000 of income tax on B/.400,000, the company distributes B/.300,000 of Panamanian source profit; it withholds B/.30,000 and the foreign parent receives B/.270,000. / US$300,000 distributed, US$30,000 withheld, US$270,000 received, before any tax in the parent's country.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

10. The ITBMS, Panama's value added tax, is 7 percent from 1 July 2010; it is settled and paid monthly, and producers, traders and service providers with annual gross income below B/.36,000 are not ITBMS taxpayers.Código Fiscal art. 1057-V parágrafos 6 and 9 as worded by Ley 8 de 2010 arts. 76 and 84, art. 1057-V, 2010-03-15 official text · verified 2026-10-29

11. Employees contribute 9.75 percent of salary to the Caja de Seguro Social; employers contribute 13.25 percent of salaries until 28 February 2027, 14.25 percent from 1 March 2027 to 28 February 2029 and 15.25 percent from 1 March 2029. Each of the three thirteenth month installments carries a special 10.75 percent employer contribution and a 7.25 percent employee contribution.
Example: On a B/.2,000 monthly salary the employer pays B/.265 and withholds B/.195 from the employee until February 2027; from March 2027 the employer share is B/.285. / US$265 employer and US$195 employee a month, rising to US$285 employer from March 2027.Ley 51 de 2005 art. 101 as worded by Ley 462 de 2025 art. 84, art. 101 numerals 1, 2, 4 and 5, 2025-03-18 official text · verified 2026-10-29

12. From fiscal year 2027, foreign source passive income (dividends, interest, royalties, capital gains and similar) earned by Panamanian entities of multinational groups that do not meet the new economic substance tests is taxed at a single and final rate of 15 percent on net taxable income.
Example: A non qualifying group holding company with B/.1,000,000 of net foreign dividends would owe B/.150,000 for 2027. / US$150,000 on US$1,000,000.Ley 526 de 28 de mayo de 2026 (Código Fiscal art. 707-D and following), art. 1 (Código Fiscal art. 707-D) and art. 6, 2026-05-28 official text · verified 2026-10-29 · changed: New regime enacted 28 May 2026; applies from fiscal year 2027 under art. 6.

13. The Dirección General de Ingresos lists 17 double taxation treaties: Barbados, Czech Republic, France, Ireland, Israel, Italy, Korea, Luxembourg, Mexico, Netherlands, Portugal, Qatar, Singapore, Spain, United Arab Emirates, United Kingdom and Vietnam. Argentina is not on the list, so payments between the two countries rely on each country's domestic law.Dirección General de Ingresos, Listado de Convenios, Treaty list, 2026-10-29 official text · verified 2026-10-29

Item	Figure	Source
Corporate income tax	25 percent; above B/.1,500,000 of taxable revenue, the higher of ordinary income or 4.67 percent of revenue	Código Fiscal art. 699
Dividend tax	10 percent (Panamanian source), 5 percent (foreign source, export or listed exempt income)	Código Fiscal art. 733
ITBMS (VAT)	7 percent, monthly; no taxpayer status below B/.36,000 of annual gross income	Código Fiscal art. 1057-V
Tasa única	B/.300 a year per company, B/.400 per foundation	Código Fiscal art. 318-A
Aviso de Operación tax	2 percent of capital, B/.100 to B/.60,000 a year	Código Fiscal art. 1004
Social security	Employer 13.25 percent (14.25 percent from 1 March 2027), employee 9.75 percent	Ley 51 de 2005 art. 101
Currency	Balboa at par with the US dollar; no exchange controls	Constitution art. 262; Ley 54 de 1998 art. 2
Tax treaties	17, none with Argentina	DGI treaty list

Panama headline numbers for a foreign investor (verified 29 October 2026)

Worked example

A foreign group puts US$50,000 of capital into a new Panamanian sociedad anónima that distributes products locally. Formation: B/.300 tasa única at registration plus registry and notary fees; Aviso de Operación tax of 2 percent of capital, B/.1,000 a year.
In its first full year it earns B/.400,000 of net taxable income and pays B/.100,000 of income tax at 25 percent. It distributes the remaining B/.300,000, withholds B/.30,000 of dividend tax and remits B/.270,000 (US$270,000) to the parent with no exchange approval.
With five staff earning B/.2,000 a month, employer social security costs B/.1,325 a month until February 2027 and B/.1,425 a month from March 2027.

Step by step

Choose the vehicle: most foreign investors use a sociedad anónima (see Entities and setup).
Hire a Panamanian lawyer or law firm as resident agent, sign the pacto social (with consular authentication if signed abroad) and register it at the Registro Público, paying the first B/.300 tasa única.
Make sure the agent records the beneficial owners within 15 business days.
Obtain the taxpayer registration and file the Aviso de Operación through PANAMAEMPRENDE before trading.
Register as employer with the Caja de Seguro Social before hiring, and register for ITBMS once annual gross income reaches B/.36,000.
Put the recurring dates in the compliance calendar: monthly ITBMS, 31 March income tax return, estimated tax installments, 30 April records to the agent and the tasa única date.

Common traps

The territorial rule does not cover everything: services paid from Panama to foreign providers and deducted locally are Panamanian source and carry withholding (see Taxes).
Missing the tasa única for three consecutive years leads to suspension of corporate rights; since 27 February 2026 the State has been dissolving suspended entities.
Group holding companies relying on foreign source exemption must review substance before fiscal year 2027, when non qualifying passive income is taxed at 15 percent.
There is no double taxation treaty with Argentina, so Argentine shareholders get no treaty rate on Panamanian dividends.
A pacto social signed abroad without consular authentication cannot be protocolized in Panama.

Sources

The first 90 days in Panama: from the pacto social to the first monthly filings →

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